Santander raises mortgage rates | Daily Mail Online

Another major bank is increasing its mortgage rates following gloomier forecasts on the future of interest rates and the economy. Santander will put up prices by up to 0.13 percentage points on its homeowner and buy-to-let mortgages today.

HSBC increased its rates on Monday, and the news also comes less than 10 days after Barclays raised price of its mortgage deals . Santander’s increases including hiking the price of all of its new home mover mortgages on two, three and five-year fixed rates by up to 0.13 per cent. Ten-year fixes will increase by up to 0.08 per cent. First-time buyer mortgages will increase by up to 0.12 per cent.

In addition, two-year remortgage rates for those with 40 per cent equity or more will increase by 0.10 per cent. For those with 25 to 40 per cent equity who are choosing three, five and ten-year fixes they will go up by 0.11 per cent. Lenders are putting up rates for a number of reasons. First, gilt yields – long-term Government borrowing costs – hit a 27-year high last week due to market unease about the state of the public finances.

Concerns about potential tax rises in the Autumn Budget at the end of November are also weighing on sentiment. And Andrew Bailey, Governor of the Bank of England, has recently said there is now ‘considerably more doubt’ about further interest rate cuts this year. This followed a higher-than-expected inflation reading for July at 3.8 per cent, which was published in late August.

Average rates across the whole market have inched up in the last few days, with the typical five-year fix now 5.02 per cent and the average two-year fix now 4.98 per cent according to Moneyfacts. These rates remain lower than at the peak of the mortgage market in August 2023 when they reached 6.37 and 6.86 per cent respectively. Jack Tutton, director at Fareham-based SJ Mortgages, told the news agency Newspage: ‘The gloom for mortgage holders continues as Santander follows many other lenders in increasing their rates.

‘Instability in government is causing chaos in the finance markets, which is why we are seeing mortgage rates increase. ‘Given that the Budget is approaching, there are no signs that things will get better for mortgage holders in the short term at least.’ This is all being reflected in swap rates, which predict where fixed mortgage rates could be two or five years in the future – and therefore influence the prices banks put on them today.

Mortgage experts say rates are likely to tick up gradually this month and are urging those who need to remortgage soon to consider locking in a deal ahead of time before rates rise. Most lenders allow borrowers to lock in a new deal up to six months ahead of their current one ending, and still switch before it kicks in if they find a cheaper one.

Ranald Mitchell, director at Norwich-based Charwin Mortgages, said: ‘With no guarantees on where the market will head next, those in need of a mortgage should act sooner rather than later as delaying could mean paying more. ‘The clear message is that the best deals are often short-lived, and borrowers who wait for certainty risk missing out.’