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Mortgage rates could rise again, as Santander and TSB will increase interest on some of their fixed rate operations.
Santander, which temporarily withdrew several of its mortgage offers on Friday, has confirmed that they will return with higher interest rates.
Starting tomorrow the bank will increase some fixed rates up to 0.22 percentage points.
Increases: Santander and TSB have announced plans to increase some of their mortgage rates
Also from tomorrow, TSB will increase mortgage rates on five-year fixed deals aimed at first-time buyers and home-movers by up to 0.25 percentage points.
Two-year fixes will also increase by up to 0.1 percentage points.
For homeowners remortgaging, TSB is increasing rates on five-year deals by up to 0.25 percentage points.
Until last week, mortgage rates had been falling. Between early July and the end of last week, the cheapest five-year fixed-rate mortgage available fell from 4.28 percent to 3.68 percent.
Meanwhile, the two-year lowest fixing fell from 4.68 percent to 3.84 percent during that time.
But as of this week, the lowest five-year fix is now 3.79 percent and the lowest two-year fix is 3.99 percent.
Why are mortgage rates rising?
Mortgage lenders consider several things when setting their fixed mortgage rates, from borrower demand to general economic sentiment to their own margins.
Swap rates are the easiest way to interpret where fixed rates are headed.
Sonia swap rates are an interbank lending rate that essentially shows what lenders believe the future holds with respect to interest rates.
When Sonia swaps rise high enough, it often results in fixed mortgage rates rising, and vice versa when they fall.
In recent weeks Sonia’s swaps have risen again. As of October 10, two-year swaps were at 4.03 percent and five-year swaps at 3.79 percent.
That marks an increase from a month ago, when two-year swaps were at 3.74 percent and five-year swaps were at 3.38 percent.
It is rare for the lowest fixed mortgage rates to fall below equivalent Sonia swap rates.
Chris Sykes, technical director at mortgage broker Private Finance, says he would not be surprised to see some more lenders increase rates in the coming weeks.
“The margins that lenders are making on rates have been tight over the last few weeks and it is not surprising that these margins cannot be maintained by lenders, so we are seeing some pullbacks and slight rate increases,” Sykes said.
“These are not panic stations, not all rates have skyrocketed, only some of the major market rates have increased slightly, so it takes us back in time to where rates were about a month ago, not to where they were four months ago. back.
‘I don’t see rates falling much further unless there is more than a 0.25 per cent reduction in the base at the November MPC meeting, or if there is some really positive economic data that heavily influences rates. Sonia swaps.
“In the short term, swaps have been rising, so I wouldn’t be surprised if we saw a few more rate hikes, but it should only be 0.1 to 0.2 percent, which shouldn’t be enough to change a transaction.”