Mortgage deals: Some lenders hike rates by as much as 0.5% in a week

Some mortgage lenders have hiked rates by as much as 0.5 percentage points in the last week, meaning interest costs are now above pre-pandemic levels for the vast majority of borrowers.

In the last seven days, a raft of banks and building societies have upped their rates including Santander which increased them by up to 0.5 percentage points.

Halifax and Accord, part of Yorkshire Building Society, both increased rates by up to 0.45 percentage points.

Going up: Multiple mortgage lenders have pushed up some of their rates in recent days, following two increases in the Bank of England’s base rate

Virgin Money increased some of its rates by up to 0.3 per cent, while the buy-to-let lender Birmingham Midshires pushed them up by as much as 0.31 per cent.

Platform, part of the Co-operative Bank, has reintroduced rates which are as much as 0.5 percentage points more expensive than when a comparable mortgage was previously available.

Average rates for second steppers and those at the top of the property ladder have rocketed by between 0.4 and 0.5 percentage points in the past six months alone, according to exclusive data for This is Money by financial information service Moneyfacts.

The typical two-year fixed mortgage with a 25 per cent deposit had a rate of just 2.03 per cent in September 2022, according to Moneyfacts, but today that figure sits at 2.43 per cent.

For someone with a 40 per cent deposit, it has risen from 1.51 per cent to 1.92 per cent.

Date   25% deposit 40% deposit  Average – all deposit sizes
1 Feb 2020  2.27%  1.79%  2.42% 
1 Feb 2021  2.28%  1.69%  2.53% 
1 Sep 2021 2.03% 1.51%  2.38% 
1 Feb 2022  2.26%  1.82%  2.44% 
23 Feb 2022  2.43%  1.92%  2.60% 
Source: Moneyfacts
Date   25% deposit  40% deposit Average – all deposit sizes 
1 Feb 2020 2.56%  2.11%  2.73% 
1 Feb 2021  2.47%  1.91%  2.73% 
1 Sep 2021  2.26%  1.71%  2.63% 
1 Feb 2022  2.49%  2.06%  2.71% 
23 Feb 2022  2.70%  2.18%  2.87% 
Source: Moneyfacts 

Looking at five-year deals, the average 25 per cent deposit rate has gone from 2.26 per cent to 2.7 per cent in six months, and the average 40 per cent deposit rate from 1.71 per cent to 2.18 per cent.

Mortgage brokers have warned borrowers who are approaching the end of a fixed period to lock in a new deal now, in order to protect themselves against future rate rises.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘The very cheapest mortgage rates are long gone and several lenders are raising rates as the general movement in money market rates is upwards.

‘Rates can be booked up to several months in advance so those needing a new deal may wish to plan ahead and secure a rate before the most competitive products disappear.’

Brokers are urging borrowers approaching the end of a fixed mortgage deal to see if they could negotiate a new one now, as rates can sometimes be locked in ahead of time

Brokers are urging borrowers approaching the end of a fixed mortgage deal to see if they could negotiate a new one now, as rates can sometimes be locked in ahead of time

In the summer of 2021, mortgage rates hit all-time lows with the cheapest charging as little as 0.83 per cent.

This was because lenders wanted to capitalise on the hot property market, and could borrow cheaply with the Bank of England’s base rate sitting at 0.1 per cent.

However, successive base rate rises have meant that banks have adjusted their rates accordingly.

The base rate has been increased twice by the Bank of England’s policymakers, going from 0.1 per cent to 0.25 per cent in December 2020 and from 0.25 per cent to 0.50 per cent earlier this month.

Rates are also now higher than they were pre-pandemic for the vast majority of borrowers.

The overall average mortgage rate on a two-year fix is now 2.6 per cent, compared to 2.42 per cent in February 2020.

Since the start of February 2022 alone, that average has increased by 0.16 percentage points.

The typical five-year fix has also risen from 2.71 per cent at the beginning of this month to 2.87 per cent today.

Pre-pandemic, that rate was sitting at 2.73 per cent.

The only borrowers who are yet to see big rate hikes are those with small deposits; typically first-time buyers.

The typical rate on a two-year fix with a 5 per cent deposit is currently 3.12 per cent. This is a substantial fall compared to six months ago (3.57 per cent) and is also lower than February 2020 (3.22 per cent).

Date  Two-year fix  Five-year fix 
1 Feb 2020 3.22% 3.52% 
1 Feb 2021  3.99%  3.69% 
1 Sep 2021  3.57%  3.83% 
1 Feb 2022  3.05%  3.35% 
23 Feb 2022  3.12%  3.40% 

For a five-year fix, the average rate is 3.4 per cent, compared to 3.83 per cent six months ago and 3.52 per cent before the pandemic.

However, both of the current figures are slightly up on the averages recorded at the beginning of this month, which sat at 3.05 per cent and 3.35 per cent respectively.

Such borrowers were previously benefiting from a downward slide after rates were hiked up at the start of the pandemic, due to lenders adjusting their risk appetites.

The increases of the past few weeks could signal a turning tide for low-deposit borrowers.

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