The whole country is raising mortgage prices even as the base rate is held – following a move by rival Santander

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  • It comes as the Bank of England continues its painful battle against inflation.

Britain’s biggest building society raised mortgage rates yesterday, a sign that a price war between lenders may have been stopped in its tracks by the Bank of England.

Nationwide said it would increase fares on some of its home loan products just a week after budget cuts were announced – and following a recent similar rate hike by rival Santander.

The move comes as the Bank signaled that the painful battle against inflation was not yet over – although it is confident of hitting its 2 per cent target by April.

Governor Andrew Bailey yesterday opened the door to cutting the Bank’s benchmark interest rate – but not yet.

It remained at 5.25 percent after a series of increases intended to bring down inflation.

Nationwide has announced it will raise rates on some of its home loan products just a week after announcing cuts - and following a similar recent move from rival Santander.

Nationwide has announced it will raise rates on some of its home loan products just a week after announcing cuts – and following a similar recent move from rival Santander.

The Bank’s nine interest rate setters were split on their latest interest rate decision, with six voting to hold interest rates steady, two voting for an increase and one for a decrease.

It was the first time anyone voted for a reduction since March 2020, at the height of the pandemic.

> Bank keeps rates at 5.25%: what this means for YOUR mortgage and your savings

This suspension is likely to impact deals offered by mortgage lenders – where rates have fallen in recent months.

David Hollingworth, of mortgage broker London & Country, said: “Some lenders will still make improvements, but the lowest appear to be hitting rock bottom. Those expecting ongoing rate cuts may find that the very pace of the rate war could slow.

Falling inflation and the possibility of rate cuts could give the Conservatives a boost ahead of the next general election.

Chancellor Jeremy Hunt said the fact that interest rates appear to have peaked was “obviously very positive news for families with mortgages”.

But Nationwide’s move highlighted the disconnect between the Bank’s actions and the rates offered to borrowers, which could mean landlords will remain under pressure over the coming months.

The Bank of England began raising interest rates in December 2021 as it struggled to bring down inflation, which soared into double digits as energy costs and food bills soared, pushing wage demands upwards and threatening a price spiral.

Interest rates rose as high as 5.25 percent last summer, but have remained unchanged since.

Bank of England Governor Andrew Bailey yesterday opened the door to cutting the Bank's benchmark interest rate - but not yet.

Bank of England Governor Andrew Bailey yesterday opened the door to cutting the Bank’s benchmark interest rate – but not yet.

In many cases, landlords have seen their monthly repayments increase by hundreds of pounds as they have been forced to take on new, more expensive deals.

Nationwide has announced that rates on some products will increase from today “to ensure our mortgage rates remain sustainable”.

Yesterday, Mr Bailey unveiled new economic forecasts which suggest it is make faster-than-expected progress in reducing inflation – thanks to plummeting energy bills.

The Bank now estimates that inflation will fall to 2 percent by the second quarter of this year, 18 months earlier than expected. But he warned that this drop would be temporary.

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