Mortgage rates 'edge up' from some lenders as Government borrowing costs soar and Pound falls
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Some lenders have started “edging up” mortgage rates after the cost of Government borrowing soared and the Pound fell in value. However, other banks and building societies are sticking with current rates as they wait to see if the City is overreacting to the economic situation.
As Chancellor Rachel Reeves came under growing pressure, Sir Keir Starmer gave her his full backing, following calls from the Tories for her to have pulled out of an official trip to China at the weekend to deal with the UK’s economic woes. Nicholas Mendes, mortgage technical manager at John Charcol said there had been a “mixed picture” over the past week on how lenders have responded.
“While some lenders have begun to edge rates upwards in response to rising swap rates, others have held back, likely aiming to avoid unsettling borrowers or the market with knee-jerk reactions,” he said. “That said, the upward pressure on rates is undeniable. Swap rates, which heavily influence the pricing of fixed-rate mortgages, have been creeping up.
“With the margin between these and the most competitive mortgage deals narrowing, it seems increasingly likely that rates will rise further if current trends persist.”. The average 2-year fixed residential mortgage rate on Monday was 5.48%, up from 5.47% the previous working day, according to Moneyfacts.
The average 5-year fixed residential mortgage rate was 5.26%, up from 5.25% the previous working day. The pound fell to a fresh 14-month low on Monday, slumping another 0.6% to 1.21 US dollars after last week hitting its lowest level against the dollar since November 2023.
