Several major UK lenders, including Barclays and HSBC, have increased mortgage rates following concerns about the Chancellor's upcoming spending review and its potential impact on interest rate cuts.
Barclays and HSBC announced rate rises on various fixed-rate mortgage deals. These moves come as the Chancellor prepares to publish a significant spending review, which has led to market speculation about the future of interest rates.
Experts suggest the increased spending could reduce the likelihood of rate cuts this year, impacting mortgage borrowers. Barclays increased the rate on its five-year fixed-rate deal, leading to the end of sub-4% deals.
The Bank of England cut rates in May, but a further cut in June seems unlikely due to higher-than-expected inflation. Brokers note that the cost of borrowing has slightly increased, and markets are closely watching the spending review.
Some analysts predict a period of relative stability in mortgage rates, with limited room for significant reductions. While some lenders are increasing rates, others, like NatWest, have cut rates, creating a mixed market environment.
The average rate on a two-year fix fell last month, but the mortgage price war is cooling off. Experts warn that more lenders may push up prices in the coming days as funding costs stabilize.