Two major lenders have announced they are increasing their mortgage rates.
Barclays’ two year mortgage deal of 3.87 per cent has been increased to 4.07 per cent.
The deal was for existing residential purchases for those with 40 per cent deposit or equity in their home. Meanwhile their standard product has risen from 3.9 per cent to 4.1 per cent.
Halifax also confirmed it will increase its two- and five-year fixed remortgage rates by between 0.11 per cent and 0.24 per cent.
The increases follow ones by NatWest, Santander and TSB earlier in the week.
Now only Santander and Nationwide offer two-year fixes below 4 per cent.
It comes despite a higher than expected drop to inflation this week from 2.2 per cent to 1.7 per cent in the year to September.
Although mortgages are not directly affected by inflation, many products are affected by the Bank of England base rate, which inflation influences.
While interest rates are widely expected to fall from 5 per cent to 4.75 per cent at the next Monetary Policy Committee (MPC) meeting in November, mortgage rates have started to increase over the past few weeks.
This is a result of swap rates, which influence the prices lenders can offer, rising.
David Hollingworth, associate director at L&C Mortgages, said: “The market expectation for interest rates has built in another cut this year but has been slightly less optimistic about whether rates will now fall as quickly, as had been forecast over the summer.
“As a result, the recent cycle of cuts to fixed mortgage rates has been juddering to a stop and in some cases going into reverse, as an increasing number of lenders have increased rates.”
Nick Mendes, of John Charcol brokers, added: “The recent price adjustments are a minor setback, effectively bringing rates back to where they were 4 to 6 weeks ago, rather than signalling drastic changes.
“While the market responded positively to inflation data, it is unlikely that many lenders will lower their prices immediately. Most will likely wait for the upcoming budget announcement before making any further adjustments.”
Average mortgage rates for both two and five year fixed deals rose for the first time in three months earlier in October.
Now, the average two year fixed deal is 5.41 per cent while the average five year is 5.09 per cent.
However, it is hoped that mortgage rates may start to fall again later this year.
In the mean time, experts said for homeowners coming to the end of their mortgage deal, now might be the time to lock in a new deal.
Chris Sykes of brokers Private Finance said: “Those that are buying should reconsider their purchasing position and consider how their monthly repayments may look.
“If you plan to remortgage or product switch with an existing lender in around the next 6 months, it could be beneficial to explore your options now and lock in a rate. Similarly, if you have an offer accepted on a property, it may be wise to secure a rate soon for added certainty, with the flexibility to adjust if necessary later on.”
