UK's latest inflation figures have sent the money markets into turmoil and pushed the swap rates up. Homeowners and first-time buyers were being warned to expect 5%-plus fixed-rate deals in the coming weeks.
According to reports, Nick Mendes, mortgage technical manager John Charcol, listed his doubts about two-year fixed-rate mortgages and predicted that there would probably be few five-year deals priced at less than 5% in the coming weeks, given the fact that lenders are forced to reprice their mortgages upwards.
Within hours of his comments, one of the UK’s biggest lenders, Nationwide, announced its decision to increase selected fixed and tracker rates by up to 0.45%. The prospect of 5% mortgages will serve as a further blow to potential first-time buyers and households hoping to re-mortgage their existing deal.
According to Jonathan Haskel, Bank of England’s interest rate setter, borrowing costs may have to rise further.