Major mortgage lenders hike rates, putting pressure on homeowners and Chancellor Rachel Reeves' promise to ease living costs. Despite better-than-expected inflation figures and a predicted base rate cut, lenders like TSB, Virgin Money, and Co-op are increasing rates, while others like Santander and Accord are implementing both increases and decreases. Experts predict continued volatility in the mortgage market due to ongoing economic uncertainty.
Several major mortgage lenders are increasing rates this week, despite better-than-expected inflation figures and a predicted cut to the base rate . This news comes as a blow to homeowners and the Chancellor Rachel Reeves, who promised to ease bill pressures for households across the country. One of Keir Starmer’s key targets for the Government was to improve living standards, something measured by real household disposable income.
TSB is increasing rates on its two and five-year products by up to 0.15 percentage points, Virgin Money upped rates by 0.2 percentage points on Wednesday, and Co-op is increasing fixed rates by 0.59 percentage points on Thursday. This will put pressure on the Chancellor, who is also facing challenges with the high cost of servicing government debt. Economists warn she may have to make deeper cuts or raise taxes in March to meet her fiscal guidelines, adding to the cost of living pressures on voters. Flatlining growth is another headache for Reeves, who is struggling to boost the economy. Anything that takes spendable income out of consumers' hands will be unwelcome.Despite some lenders increasing rates, others are simultaneously cutting them. Santander, for example, is upping rates by up to 0.34 percentage points but reducing some by 0.29 percentage points. Accord, a smaller lender, is increasing buy-to-let rates by up to 0.2 percentage points, though it is also cutting rates on its 80 per cent loan-to-value two-year product by 0.21 percentage points. Experts believe that while recent inflation data has calmed bond markets, mortgage rates will likely remain volatile in the short term. Swap rates, which mortgage lenders use to price their products, are starting to decline but are still influenced by ongoing economic uncertainty. Professor Alper Kara of Brunel University, London, suggests that further decreases in mortgage rates are unlikely until this uncertainty eases. However, a potential base rate cut by the Bank of England in February could lead to reductions in mortgage rates
Mortgage Rates Inflation Base Rate Chancellor Housing Market Economic Uncertainty
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