Two of the biggest mortgage lenders Barclays and Halifax have increased their mortgage rates in a new blow to borrowers and first time buyers
Barclays said that from tomorrow most of its rates for purchase and remortgage will go up by 0.2%.
The move means that it will no longer be offering rates below 4% except for a five year fixed deal for purchase for buyers with a deposit of at least 40%. This rises from 3.76% to 3.96%.
However all its two year fixed deals are now back above 4% with its lowest priced product, for Barclays Premier bank customers only, rising from 3.87% to 4.07%.
Meanwhile Halifax, the country’s biggest mortgage lender, said rates on its two and five year remortgage products will go up between 0.11% and 0.24%, also from tomorrow.
A number of other leading lenders, including Santander and NatWest, have withdrawn their cheapest deals in recent days suggesting that the days of “sub-4” rates may be coming to an end for now.
The moves follow a sharp rise in gilt yields that are used to price fixed rate deals as the City started to grow more jittery about the Budget and risk of an increase in borrowing.
By the start of this week the yield on the benchmark 10 year gilt has risen by around half a percentage point from 3.75% in September to 4.25%. It has since sunk back a little to around 4.1% following the better than expected wages and inflation figures that have raised hopes of two interest rates cuts from the Bank of England by Christmas.
Lenders had previously been rushing to slash rates in a price war aimed at stimulating demand from still cautious buyers.
But David Stirling, Independent Financial Advisor at Mint Mortgages & Protection, said: “With the Budget looming, everyone is feeling twitchy.”
