UK Mortgage Rates Surge Before Bank of England Vote

UK mortgage rates have increased before the Bank of England's upcoming vote on September 17. Major lenders such as NatWest, Santander, HSBC, Lloyds Bank, and TSB raised selected mortgage rates for a second time this month, while Nationwide and other building societies also repriced.

The average two-year fixed rate has climbed to 5.73%, from 4.84% at the start of March. This increase affects borrowers, with a £250,000 repayment mortgage over 25 years now having a calculated monthly payment of about £1,570, up from £1,438.

The broader Moneyfacts average for new mortgages was 5.68%, up from 4.90% in March. Product withdrawals add another risk for borrowers, as a returning deal may carry a higher coupon even if the central bank leaves Bank Rate unchanged.

UK bank shares closed higher on September 16, with NatWest finishing at 702.2p, Lloyds ending at 111.25p, and HSBC closing at 1,507.8p. This optimism is based on banks putting new mortgage assets on their books at higher yields, supporting net interest income.