Mortgage rates lifted by lenders
Borrowers coming up to remortgage have been urged to snap up a good deal while they still can, amid warnings that the cost of home loans is set to soar again.
Some of Britain’s biggest lenders, including Abbey and Nationwide, trimmed rates last week. However, that was before the Bank of England said on Thursday that inflation could jump to 3.7% by the end of the year, and indicated that it would be more cautious in cutting interest rates.
The inflation report sent rates in the wholesale markets soaring, suggesting rates on offer to homeowners would also head up, at least in the short term.
Inflation forecast hits cheaper loans
Hopes of imminent cuts in new mortgage rates were dashed yesterday as the Bank of England’s inflation judgment sent money market interest rates soaring for a second successive day.
Three-month sterling Libor, the benchmark rate used to price many loans, soared by 0.04 percentage points to 5.84 per cent, bringing the rise to 0.08 percentage points in just two days and wiping out most of the improvement of the previous three weeks.
Homebuyers and borrowers looking to remortgage were warned to brace themselves for a worsening of mortgage terms because of the sea change in expectations about base rate over the next year. The average rate for a two-year loan reached 6.64 per cent yesterday – the highest rate since 2000, according to Moneyfacts.