Homeowners are set to face higher mortgage costs this week ahead of the latest Bank of England interest rate decision.
Swap rates, which lenders use to determine the amount they charge for mortgages, have risen to a three-year high.
Uncertainty in the international bond markets is causing the volatility that is affecting Britain’s loans market.
It is prompting banks and building societies to act – starting with Coventry Building Society last week – , by raising their rates.
We cannot wait for uncertainties to resolve themselves before acting.”
Last month, the Bank of England held interest rates at 3.75% again, but three members of its nine-strong Monetary Policy Committee (MPC) voted for an increase.
Huw Pill, the Bank’s Chief Economist and an MPC member (pictured), is in favour of raising the Bank Rate. “We cannot wait for uncertainties to resolve themselves before acting,” he said.
“I see benefit in acting clearly, promptly and decisively… This would cut through the noise inherent in the current uncertain environment in a way that bolsters the clarity and effectiveness of our policy choices,” The Guardian reports.
Best hope
The MPC meets again next week to make its latest decision, and the property market will be praying there is no increase in rates with a ‘hold’ vote probably the best hope.
The average two-year fixed rate mortgage rate is 5.59%, while a five-year fixed deal costs 5.63%, according to Moneyfacts.