23/04/2024
Mortgage Rates update...April '24...A mixed picture
Britain's big banks have begun hiking up mortgage rates as there's talk that slashing interest rates this year might not do the economy much good.
Barclays, HSBC, NatWest, and Leeds Building Society are all upping the costs on certain fixed-rate mortgage deals starting this Tuesday, following hints from inflation figures that the Bank of England might need to keep interest rates higher for longer.
Barclays is raising rates for the second time in a week, adding 0.1 per cent to several mortgage products for homebuyers and those looking to refinance.
NatWest is nudging rates up by 0.1 per cent on some switching deals for existing customers, while Leeds Building Society is bumping up fixed rates on some deals by up to 0.2 per cent.
HSBC hasn't given specifics but has warned brokers to expect prices to go up across the board.
Simon Gammon from Knight Frank's broking division noted that lenders were initially hesitant to increase rates but changing economic conditions aren't great for borrowers. He reckons these hikes, though small for now, will likely be followed by a stable period until any base rate cuts come into play.
Estate agents predict these rate increases will certainly put a dampener on any hopes of a property market recovery.
Market expectations for rate cuts have shifted as inflation proves more resilient than anticipated. Although UK inflation dipped to 3.2 per cent last month, it's still higher than expected, pushing back predictions for rate cuts.
The Bank of England, initially thought to be slashing rates six times this year, might now only go for two or three cuts, affecting around 1.6 million people coming off fixed-rate mortgages this year.
Estate agents were banking on a spring resurgence in the property market, but Gammon suggests these rate hikes will likely slow down any recovery efforts.
Bank of England governor Andrew Bailey expects a significant drop in inflation next month, thanks to lower energy bills, maintaining the UK's aim to keep consumer price rises around 2 per cent.
Chancellor Jeremy Hunt insists the government's plan to tackle inflation is on track, with inflation falling faster than expected. However, Labour's Rachel Reeves points out that monthly mortgage bills are still on the rise, and inflation remains above the Bank of England's target.
