UK Lenders Hike Fixed Mortgage Rates Amid Inflation Pressures
Major UK lenders have raised fixed mortgage rates as inflation pressures build ahead of the autumn buying season. The increases, which range from 0.2 to 0.3 percentage points, reflect rising inflation expectations and volatile bond markets. According to Traders Union, Santander, HSBC, Nationwide, Lloyds, Halifax, Barclays, and TSB have all increased their fixed-rate mortgage prices this week.
The average two-year and five-year fixed mortgage rates have reached their highest levels since June and April, respectively, prompting some borrowers to pause purchase and refinancing decisions. Aaron Strutt, product director at Trinity Financial, warned that further increases appear likely and that rapid repricing is a negative signal for borrowers.
The Bank of England's base rate remains at 3.75%, but August UK inflation has risen to 3.1%, strengthening expectations of another increase later in the year. Swap rates used by lenders to price fixed-rate mortgages rose on Monday to 4.8% for the two-year overnight rate and 4.84% for the five-year rate before easing on Thursday to 4.58% and 4.63% respectively.