The average interest rate on a five year fixed rate mortgage has increased by 0.21 per cent in the last week, Moneyfacts.co.uk has revealed.
The average five year fixed rate mortgage
jumped from 5.61 per cent on Monday last week, to 5.82 per cent on Friday. Meanwhile, the average two year fixed mortgage rate went from 4.74 per cent to 4.90 per cent during the same period.
And, if that is not enough for mortgage
borrowers shopping around for the best deal, the number of fixed rate deals has fallen by 50, with just 887 fixed rate mortgage deals remaining.
Commenting, Michelle Slade, analyst at Moneyfacts.co.uk said: "After a period of relative calm in the mortgage market, lenders are stumbling over each other to increase fixed rate mortgages. The last time we saw such frantic activity was at the end of June 08, when the average two year fixed reached a staggering 7.08 per cent.
"The recent increase can be attributed to the hike in swap rates that we saw a few weeks ago. Just like last time, lenders are quick to pass any increase in the cost of wholesale funding on, but are never quite as quick to reduce rates when the cost of funding declines," she added.
Meanwhile, those with higher loan to values (LTVs) face further rate hikes as Andrew Hagger of Moneynet reveals that those borrowing an extra 10 per cent on a £200,000 mortgage face paying an extra £236 a month in mortgage repayments – the majority of which is eaten up by interest loading.
Mr Hagger said: "There will be many people now faced with being on the wrong side of the 75 per cent line on the back of the sharp correction in property prices. Even though such borrowers will have an unblemished repayment history over a number of years they will be penalised with loaded interest rates purely due to the fact that the value of their property has fallen.
"With house prices starting to slow you have to start to question how much of this difference in pricing is risk related and how much is nothing more than a mechanism to boost profits at the customers' expense during these difficult times."Get mortgage quotes and advice »
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