Homeowners have been dealt a fresh blow after experts warned key mortgage rates could surge above 6 per cent again as early as next week.
More than 20 lenders have hiked their mortgage rates this week, pulling some of the most competitive home loans from the market, including several deals below 5 per cent.
The cost of borrowing has been surging since Bank of England officials signalled last week that a long-awaited cut in rates would be delayed further.
Santander yesterday increased its mortgage rates by up to 0.26 percentage points for the second time in four days.
The move follows increases at NatWest, Halifax and Nationwide, which also pushed up the prices of their fixed-rate purchase and remortgage deals by up to 0.25 percentage points.
Now, the average two-year fixed-rate deal could breach the 6 per cent mark in the coming days – for the first time since December.
Aaron Strutt, of Trinity Financial, said: ‘If lenders keep on putting up their rates over the next few weeks it is likely that two-year deals will go over 6 per cent in the next week or two.
‘But you can still get a two-year deal for much cheaper.. so it’s worth shopping around.’
The average two-year fixed-rate deal is 5.93 per cent, up from 5.76 per cent in January, according to website Moneyfactscompare.
For someone with a £200,000 mortgage over 25 years this would be the difference between paying £1,259 and £1,280 a month, equivalent to an extra £252 a year.
Around 1.6million borrowers with fixed-rate deals will need to remortgage this year, according to UK Finance, the industry trade body.
Rachel Springall, finance expert at Moneyfactscompare, warned: ‘Borrowers coming off a fixed-rate mortgage and onto their revert rate this year could see their repayments shoot up, so securing a lower rate deal is wise.’
Building societies cut their mortgage rates in January in anticipation that the Bank of England would slash its base rate in the first half of this year.
But the cost for banks to borrow money to lend to homeowners, or the ‘swap rate’, has been rising amid signs that buyers and homeowners will have to wait much longer for a fall in interest rates.
Markets now predict the Bank will cut rates in August for the first time since it began hiking rates in 2021.
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