Nationwide is increasing its fixed rates by up to 0.25 percentage points on Friday, while Santander is increasing some deals by 0.1 percentage points.
Inflation in the year to April hit 3.5 per cent – higher than most economists expected – and this has led traders and economists to reduce their bets for how quickly the Bank of England will cut interest rates.
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Swaps had been falling after Donald Trump’s tariff policies led experts to think interest rates would fall rapidly, to limit damage to the economy.
But rates are now rising again, and mortgage brokers predict that further lenders could increase their rates soon.
“The sub-4 per cent rates we have been used to seeing and borrowers like so much will almost certainly be pulled soon, given how much the cost of funding has increased.
Elliott Culley of Switch Mortgage Finance said that if it became clear there would be fewer interest rate cuts this year, then customers should “expect to see the current mortgage rates disappear very quickly.”
But economists are now far less certain of this.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said after Wednesday’s inflation figure: “The Bank of England will struggle to cut twice more this year after inflation surged to 3.5 per cent.”
How to beat rising mortgage rates
If you’re buying a home…
When you apply for a mortgage and receive a formal offer, most lenders will allow you to lock in that rate for a fixed period, typically between three and six months, until you complete on the purchase.
Some lenders even offer validity periods of up to nine months, particularly in cases involving new builds, which can take longer to complete.
If your mortgage is coming to an end…
If your mortgage is expiring later this summer, you can act now to secure a cheap rate in advance.
If rates get cheaper, you can often switch onto a cheaper deal before your current one expires. Recently, most lenders have let you lock in a rate six months in advance of your deal expiring, though this has recently reduced.
“The timescales most lenders now offer take a new deal has moved from a six-month window to three or four months, as the markets have become more settled,” explains Justin Moy of EHF Mortgages.
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