Average mortgage rates today are at their highest level in six months – and still rising – as lenders pass on funding costs to borrowers.
The cost to lenders of raising funds on the swap rate market has soared in recent months. At the end of November, the two-year swap rate stood at 1.35%; today it stands at 1.98% – 47% higher.
Michelle Slade, spokesperson for Moneyfacts.co.uk, said: “Fixed mortgage rates continue to rise as lenders pass on the higher cost of funding to borrowers.
“The majority of lenders have increased rates since the start of the year, with some mortgage deals seeing rate rises of more than 0.50%.
“Borrowers who have delayed the decision to commit to a new deal will now find themselves having to pay higher monthly payments.
“On a mortgage of £150,000, a 0.50% increase in rate would add £42 per month to a borrower’s repayments.
“With no signs of swap rates starting to fall, the likelihood is that mortgage rates will rise further.
“While the rise in swap rates is a headache for borrowers, it’s providing a boost for savers.
“Lenders are looking at in-house sources of funding for mortgages and have increased savings rates in a bid to attract higher levels of deposits.
“Recent reports are suggesting that a base rate rise could happen sooner than previously thought.
“Any rise in base rate would push mortgage rates higher, so borrowers looking to fix their repayments should act sooner rather than later.”
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