A major lender has increased its mortgage rates as experts say there is likely to be more rises to deals in the coming weeks.
TSB has increased some of its mortgage rates by up to 0.2 percentage points with other providers expected to follow suit.
It comes as swap rates have risen in the past week, although they dipped slightly this morning.
Fixed mortgage prices are heavily based on these rates, which follow long-term predictions for where the Bank of England base rate will go in the future.
Justin Moy of EHF Mortgages said: “Swaps have been rising for days. They are up as the unrest with world trade has subsided, and tariff talk between China and the US has been much improved – so the chances of cutting rates to help improve the UK economy recedes at the same time.”
He believes that, as a result, there may be a pause in mortgage rate reductions.
“Some lenders are still cutting rates but the trend is likely to see a small increase across most lenders in the next week or so.”
David Hollingworth of L&C Mortgages added: “Swaps have risen enough in the last week to at least put brakes on the cut to fixed rates and we may see some tweaks up too as lenders once again adjust to shifting market conditions.”
Andrew Montlake, managing director at Coreco warned that “anyone who closely monitors the swap markets will have been expecting rate increases from lenders at some point this week”.
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However, several lenders are still making cuts. NatWest is cutting rates by up to 0.25 percentage points and Clydesdale Bank is also reducing its deals by up to 0.2 percentage points.
Interest rates recently fell to 4.25 per cent leading to more mortgage cuts with three more base rate cuts expected this year.
Aaron Strutt of brokers Trinity Financial said: “The economic outlook changes on a very regular basis. The base rate reductions have clearly helped bring down rates and given more people money in their pockets to spend. I suspect some members of the Monetary Policy Committee would still rather the base rate was a bit lower even though the growth rate has risen.”
It comes as the UK economy delivered stronger than expected growth this morning, up 0.7 per cent in the January to March period, which was stronger than the 0.6 per cent that analysts had forecast.
Although not yet fed through to swap rates, the Bank of England cuts rates on the back of an expectation that growth would be very slow.
If it looks like that would not be the case, it could also mean fewer rate cuts in future.
Nick Mendes of brokers John Charcol said: “Swaps have been increasing over the past few days as markets adjust their forecast to future bank rate movement, rather than the four [cuts] now down to three including last week’s.
“While there has been an uptick the margin is still there for lenders to hold rates where they are.
“It will be lenders like TSB and building societies which will adjust more frequently as the larger lenders have larger tranches of funds to weather through any short-term volatility.”
He added that people should not panic yet but it is important to regularly keep an eye on market movements.
The average two-year fixed rate mortgage is now 5.12 per cent, according to Moneyfacts, whilst the average five-year is 5.08 per cent.
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