HSBC and the Halifax today increased the cost of mortgages, despite a widespread expectation that the Bank of England will cut interest rates before the year is out – perhaps as early as the summer.
HSBC said that from tomorrow, Tuesday Feb 6, existing customers who are switching to a new deal or borrowing more will see 2-year fixed rate deals rise. So will the 5-year fixed rate deal.
That comes just one month after HSBC introduced a 5-year fix at 3.94% for those with 40% equity in their homes.
Halifax, owned by Lloyds Bank, has also increased the cost of certain re-mortgage deals.
However, both lenders are cutting rates for first-time buyers. Halifax’s 5-year deal for borrowers with a 10% deposit is from 4.97% to 4.44% with a £999 fee.
Mortgage experts point out that those remortgaging have little choice since their fixed term deals are coming to an end, but first-time buyers can bide their time.
Justin Moy at EHF Mortgages said:
“More lenders are putting in place a significant pricing differential for those moving home compared to borrowers who are refinancing. There is still plenty of encouragement for the many first-time buyers and home movers given the recent changes in the market, with remortgage business effectively financing buyers.”
Darryl Dhoffer at The Mortgage Expert said:
“Lenders can afford to increase product transfer rates as, in many cases, they will have a captive audience of existing customers who will struggle to move elsewhere. Also, SWAP rates have increased in recent days, which is having an effect on lenders' pricing, even though the Bank of England held the base rate steady last week. Remortgages and product transfers will be saturated this year, and these increases could see other lenders follow suit.
Mortgage markets were spooked somewhat by last week’s US jobs figures, which came in so strongly that they fear the US Fed is likely to leave interest rates higher for longer.
That affected the “swaps” market at which banks borrow money to lend out. That could see a reversal of the recent trend for mortgage rates to come down ahead of expected rate cuts by central banks.
Nationwide put up some mortgage deals just last week.
