Mortgage misery as rates increase again
Latest hike by two major lenders
Published:
TWO of the UK’s biggest mortgage groups have raised their rates as lenders keep passing on higher borrowing costs to homeowners.
Halifax, which writes one in every five new mortgages, has raised the cost of half of its fixed rate products by up to 0.5%, while five of its trackers have been increased by 0.3%.
Lloyds TSB has also increased its fixed rate deals, raising them by 0.3%, to give a two-year fixed rate mortgage of 6.44% for people borrowing 75% of their home’s value, rising to 6.75% for people borrowing 90%.
Halifax blamed the move on the rising cost of borrowing through the wholesale money markets, with swap rates – what financial institutions charge each other for borrowing – rising steeply.
A Halifax spokeswoman said: “Wholesale money is very expensive.
“In addition, swap rates have moved up in recent weeks, that means fixed rates have become more expensive.
“Unfortunately, these increased costs have to be passed on to new customers by banks and building societies.”
The move by the two lenders is part of the latest round of price increases.
Fixed rate mortgage deals have reached their highest level for 10 years, with two-year fixes averaging 6.75%.
Meanwhile prime minister Gordon Brown hopes fuel costs may fall after major oil producers admitted for the first time that prices were too high.
Mr Brown who was at a global summit of oil producing nations in Jeddah, Saudi Arabia, declined to predict what level prices would reach at the pump.
But he said agreement had been secured with the Opec cartel that record crude prices of almost 140 US dollars a barrel were causing damage and investment was needed to increase supply.
