Fears grow that lenders may start to raise mortgage rates if Rachel Reeves fiddles with Britains debt figures
Mortgage rates could rise again in the coming weeks, delivering a fresh blow to homeowners if Rachel Reeves fiddles with Britain’s debt figures.
Mortgage rates could rise again in the coming weeks, delivering a fresh blow to homeowners if Rachel Reeves fiddles with Britain’s debt figures.
Falls in mortgage rates are expected to come to an ‘abrupt halt’ this week as lenders reassess the risk of a rising cost of borrowing following the Chancellor’s Budget on October 30 and growing tensions in the Middle East.
Concern from global investors that Labour will fund investment with higher debt has begun to spook lenders.
Ms Reeves has signalled she will push ahead with plans to borrow money to invest in infrastructure despite the rising cost of government debt.
Mortgage rates could rise again in the coming weeks, delivering a fresh blow to homeowners if Rachel Reeves fiddles with Britain’s debt figures
Smaller banks and building societies have already started to hike their rates, with Coventry Building Society increasing rates from tomorrow.
Specialist lenders Keystone and Aldermore announced rate increases and axed certain deals earlier this week, while the Co-operative Bank will withdraw some of its most generous rates tonight.
This could dash the hopes of hundreds of thousands of homeowners with fixed-rate deals due to end in the final few months of the year who were hoping to roll on to lower rates.
Lenders had been slashing mortgage rates since the Bank of England cut interest rates in August.
The current base rate is 5 per cent, after months at 5.25 per cent — which was the highest level for 16 years.
Borrowing costs have also been pushed higher by suggestions the Bank of England will cut interest rates only slowly.
Brokers have warned that more lenders could begin to push rates higher once again over the coming weeks.
David Hollingworth, of broker L&C Mortgages, said: ‘The mortgage market has seen rates falling in recent months but that may be coming to an abrupt halt.
‘Fixed-rate pricing depends on what the market anticipates may happen to interest rates and uncertainty over the forthcoming Budget, mixed messages from the Bank of England and global unrest is pushing costs back up for lenders.’
Swap rates — which are used by lenders to manage interest rate risk and price mortgage deals — have ticked upwards.
Mark Scott, of Positive Advisers, said: ‘It may get a lot worse before it settles down again if Rachel Reeves spooks the market with planned changes to the government borrowing rules.
‘Mainstream lenders will have to price upwards to follow those lenders more dependent on the wholesale money markets.’
Brokers are urging prospective buyers and remortgaging homeowners to secure a rate now.
