Several major lenders have raised mortgage rates in response to uncertainty over the upcoming Autumn Budget.
One such lender was Halifax which recently announced rate increases on 2 and 5 year fixed rate products of between 0.11 per cent and 0.24 per cent which became effective from October 18.
Similarly, Barclays announced that, across its residential purchase only range of products, rates increased by 0.20 per cent.
Santander became the latest large lender to increase rates, announcing increases of up to 0.20 per cent across the majority of their fixed rate range.
However, Whenthebanksaysno.co.uk managing director, Emma Jones, pointed out these announcements are slightly counterintuitive following this week’s positive inflation news and the “strong” likelihood of a rate cut by the Bank of England next month.
Instead, she explained these increases are being driven by the “potential fiscal horror show” at the end of the month, the Autumn Budget.
“You sense lenders are buckling up for the next two weeks,” she said.
“If the Autumn Budget isn’t an absolute disaster, we could see rates start to fall again very soon.”
Additionally, The Mortgage Stop director, Rohit Kohli, said that it was “inevitable” that once Halifax and Barclays increased their rates, others would follow.
“This should be a short correction from the recent reductions but it’s disappointing that some borrowers are going to have to pay more for their mortgages than in recent weeks.
“All these leaks ahead of the Budget are resulting in money leaking from mortgage borrowers’ accounts.”
Additional factors were identified by Knight Frank Finance partner, Hina Bhudia, who said: “Hot jobs data from the US earlier this month prompted a spike in swap rates, and that was compounded by a pretty warm inflation report a week later.
“That is feeding through to mortgage rates, and three large lenders have all made sizable upwards revisions to their ranges in the past week. More will probably follow."
However, Bhudia added that he did not view this as a trend that will be sustained.
“Inflation in the UK fell below target this week and recent history shows us that the inflation narrative ebbs and flows,” she continued.
“Mortgage rates will fall further during the coming twelve months, but there will be the odd spike higher along the way.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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