• Thursday, March 28, 2024

Business

Halifax raises mortgage rates for borrowers

Kimberly RodriguesBy: Kimberly Rodrigues

Halifax, the largest mortgage provider in Britain, is set to increase interest rates for new home loans starting this Wednesday (07).

This decision comes in response to escalating funding costs, following the footsteps of other major lenders who have taken similar actions.

The surge in market interest rates was triggered by unexpectedly high British inflation data recorded last month.

This prompted investors to quickly adjust their expectations, anticipating further rises in borrowing costs from the Bank of England in the upcoming months.

Following the footsteps of its competitors, such as Nationwide Building Society, Halifax, which is a part of Lloyds Banking Group (LLOY.L), has made the decision to raise mortgage rates.

This development brings back memories of a more significant disruption in the mortgage market that occurred temporarily in late September and early October of the previous year.

The market turmoil during that time was triggered by investor responses to the economic agenda put forth by former Prime Minister Liz Truss.

Halifax has announced an increase in mortgage rates, as stated in their most recent product guide for brokers.

Specifically, the rate for a two-year deal with a loan-to-value (LTV) ratio of up to 60%, which previously stood at 4.54% as per the June 1 guide, will be raised to 5.36% effective from June 7.

This adjustment comes with a fee of £999 ($1,242).

A spokesperson from Halifax has confirmed the rate increase, acknowledging the adjustment in response to market conditions.

Currently, borrowers are showing a preference for two-year deals over five-year deals, anticipating a potential decline in interest rates in the near future.

“This latest increase by the biggest mortgage lender in the UK will spook buyers and sellers alike not to mention those due to re-mortgage in the next few months,” Lewis Shaw from broker Shaw Financial Services said.

According to property website Rightmove, it was reported on Tuesday that for the first time since January, mortgage rates have reached an average of 5% or higher across all loan-to-value (LTV) brackets.

(Reuters)

 

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