Mortgage rates increase as BoE influence declines

Moneyfacts.co.uk, the price comparison website, has reported that a number of the UK’s leading lenders are increasing interest rates on their variable mortgage products, for new customers.

According to Louise Cuming, mortgage expert at Moneyfacts, lenders are increasing their rates by up to 0.25% and Ms Cuming believes that the trend “may be a sign that the market is suffering at the hands of its investors”.

This possibility is gaining ground as current high interest rates for lending between financial institutions on the money markets move mortgage rates away from the controlling influence of the Bank of England base rate.

Despite the Bank’s monetary policy committee keeping the base rate at 5.75% in September, some lenders have proceeded to increase rates for their variable mortgage products for new customers.

Ms Cuming also believes that several lenders are likely to announce rate increases in the near future and she sees the possibility of the mortgage market becoming an “untamed beast”.

As the outlook for the property market turns bleaker, there is also news from the Royal Institution of Chartered Surveyors, which completed a survey of its members at the end of August, indicating that house price growth during the month had turned negative for the first time since October 2005.

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