High street banks have begun hiking mortgage rates for borrowers with large deposits, in a move that could add hundreds of pounds a year to the cost of remortgaging for wealthier homeowners.
The shift comes as stubborn inflation figures dampen hopes of further interest rate cuts this summer.
Over the past week, nine lenders — including Halifax, Nationwide, NatWest and Santander — have increased their fixed-rate mortgage deals, targeting products typically used by those with at least 40 per cent equity. The rate rises follow a surprise jump in inflation in April, when the consumer price index climbed to 3.5 per cent, up from 2.6 per cent in March.
The unexpected uptick in inflation has unnerved the mortgage market, prompting a swift rethink on how quickly the Bank of England might cut interest rates. As a result, lenders have moved to reprice products that had recently become cheaper amid earlier forecasts of multiple rate cuts this year.
Nationwide raised its two-year fixed deal for remortgagers with a minimum 40 per cent deposit from 3.84 per cent to 4.04 per cent — a change that would cost an extra £336 per year on a £200,000 mortgage over 25 years. Its five-year fixed rate on the same terms has risen from 3.84 per cent to 4.09 per cent. NatWest also raised its remortgage rates for high-equity borrowers, pushing its two-year fix up to 3.94 per cent.
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