Mortgage companies have been chastised for raising the price of fixed-rate mortgages by up to double the rate hike.
On Thursday, the Bank of England raised interest rates from 1% to 1.25 percent in an effort to curb spiraling inflation for the fifth time in six months.
After acknowledging it had ‘underestimated’ inflation, a senior Bank official said it was prepared to implement more severe rate hikes if prices continued to increase.
This would be even worse news for consumers who have already seen their mortgage rates rise.
In just two days, around 20 lenders have hiked rates or pulled deals altogether, according to research by broker L&C Mortgages. Some even increased prices ahead of the latest Bank of England announcement.
All of HSBC’s fixed deals rose by 0.45 or 0.5 percentage points on Thursday morning, the third time in ten days the bank changed its rates. NatWest also increased the price of fixed rate deals by up to 0.27 points, and Nationwide by up to 0.4 points yesterday.
While lenders catch up with a flood of applications from clients hoping to avoid more rate hikes, other offers are disappearing entirely.
‘Rate rises have been a daily occurrence throughout this year, and this only seems to accelerate,’ said David Hollingworth of L&C. There will, without a doubt, be more.’
The rise, according to HSBC, was “not in anticipation of the Bank of England base rate decision” and that the bank analyzes its offers on a monthly basis.
Fixed arrangements are priced using swap rates, which have climbed dramatically in the previous month. Swap rates are the fees that banks charge each other to borrow money.
Mortgage rates will almost probably climb further, according to experts, with the base rate expected to reach 3.5 percent by the end of next year.
The Bank’s chief economist, Huw Pill, said the bank was willing to act ‘forcefully’ to control inflation, which is expected to surge to more than 11% by October after touching 9% last month, the highest level in 40 years.