MORTGAGE PAIN: Two-year deals more expensive after rate rise
Rightmove's home loans tracker shows that two-year fixed rate deals are 0.26% higher than a week ago.
Mortgages have seen an increase in the cost of shorter term loans in response to the Bank of England’s interest rate rise last week.
Two-year fixed deals have become more expensive after the Bank indicated it expected to see lower inflation and interest rates later this year, according to Rightmove’s mortgage tracker.
The Bank raised interest rates by a 0.5% to 5% last Thursday in an attempt to keep inflation under control.
The cost of a two-year fixed rate mortgage with a 95% LTV (loan to value) has risen 0.26% to 6.62% in the last week (see table), and for 85% LTV the price has gone up 0.21% to 5.93%.
Mortgages rise
An average monthly mortgage payment on a first-time buyer-type property for someone taking out a five-year fixed, 85% LTV mortgage, is now £1,182, up by £22 per month compared to last week.
And for someone taking out a five-year fixed, 60% LTV mortgage the average is now £815, up by £17 per month.
The average asking price for a first-time buyer type property (2 bedrooms and fewer properties) is now £226,412
Further increases will come as disappointing news to those looking to take out a mortgage soon.”
Matt Smith, Rightmove’s mortgage expert, says: “Rates continue to rise this week as the market adjusts to two sets of disappointing inflation numbers.
“The Bank [of England]’s message that it still expects inflation to ease significantly in the second half of the year is reflected in the difference between 2-year and 5-year fixed deal increases this week, with the former seeing the larger average increase,” he says.
“Further increases will come as disappointing news to those looking to take out a mortgage soon, who will be wanting stability to be able to plan for what they can afford.”
