Halifax ignores PM and hikes mortgage rates

16 April 2008 / by Rachel Mason
Halifax, the UK's biggest mortgage lender has increased rates on short term mortgage deals despite the Prime Minister's call yesterday for lenders to pass on the Bank of England's 0.25 per cent base rate cut.

Halifax's two year fixed rate mortgage and trackers have be raised by an average of 0.35 per cent, while short term deals taken out through intermediaries have seen hikes of 0.5 per cent.

The new rates mean that homeowners with a £150,000 mortgage will have to pay nearly £50 more per month, around £560 extra a year – on a two-year fixed rate deal (taken out through a broker).

And the move comes less than two weeks after Halifax re-priced its entire mortgage rage and increased rates for people who only had either a five or 10 per cent deposit.

But, the three, five and 10 year fixed rate deals have not been affected, with Halifax telling customers that it is a "win win" move, arguing that longer term deals make more sense.

A Halifax spokeswoman told the Press Association: "The pricing for the two-year fixed and tracker mortgages has increased significantly in recent weeks across the industry because of the cost of funding in the money markets.

"The difference between base rates and (inter-bank lending rate) Libor is 0.9%, the highest gap for many months."

But many industry experts argue that the move is a bad one for the housing market as a whole. Ann Robinson, director of consumer policy at uSwitch says by increasing rates, Halifax and other lenders are merely "fuelling the current lack of confidence in the property market"

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