Mortgages  

Mortgage costs sent higher by Bank rate hike

Mortgage costs sent higher by Bank rate hike

New data points to higher mortgage costs during the last quarter of 2017, following November’s interest rate increase.

For the first time in more than 10 years, the Bank of England raised interest rates in November. The official bank rate was lifted from 0.25 per cent to 0.5 per cent, the first increase since July 2007. 

The impact, according to Mortgage Brain, has meant the cost of a 60 per cent LTV 3 year fixed rate mortgage is up by 5 per cent since October 2017, with the average two year fix now 4 per cent higher.

The analysis is a breakdown of all main product types in the UK mortgage market for a repayment mortgage. It also shows a three per cent rise in the cost of a 60 per cent and 80 per cent two year fixed rate mortgage and an 80 per cent LTV two year tracker.

Mortgage Brain’s longer term analysis, however, continues to show strong year on year reductions over the past three years.

The cost of a 90 per cent two year fixed product, for example, is now 13 per cent lower than it was in January 2015. and trackers are 8 per cent and 5 per cent lower respectively.

“It looks like we’re starting to witness the effects of November’s interest rate rise and previous predictions with slow and steady cost increases being recorded month on month since October 2017,” said Mark Lofthouse, CEO of Mortgage Brain,

"So far, the increases have been marginal; however, with further rate increases predicted, we could be starting to see a shift in change in terms of mortgage cost movement compared to the past few years. Our analysis at the end of the first quarter of 2018 should reveal more.”

January has already seen a number of mortgage providers reducing their rates.