June 17, 2008 | posted by Pam Atherton in Banking, House prices, Mortgages |

Mortgage rates continue to rise as lenders react to volatility in the money markets and try to avoid  being swamped with new business as their rates become more competitive.

Today, the Nationwide building society is increasing rates by up to 0.5 per cent on its fixed-rate and tracker deals for new customers and those remortgaging.
 
The average fixed rate mortgage across the market now costs 6.72 per cent, compared to 6.26 per cent at the end of June 2007.

Rates on all of the Nationwide’s fixed and tracker rates are rising by at least 0.2 per cent - the second increase in June. For those with only a 5 per cent deposit, the Nationwide is raising its two-year fix from 7.35 per cent to 7.65 per cent. 

Nationwide borrowers with a 10 per cent deposit face the biggest rise with a 0.5 per cent hike on two and three-year fixed rate deals, making the typical £150,000 mortgage around £600 a year more expensive for those taking out one of these mortgages today.

Elsewhere, Barclays’ mortgage lender, Woolwich, has temporarily withdrawn its two-year fixed-rate products from today and will be increasing fees on some offset mortgages. It blamed market volatility for the changes.

At least 14 lenders, including the Halifax, RBS, and Birmingham Midshires, increased the cost of various  fixed-rate deals last week.

Defaqto banking consultant, David Black, said: “It’s a sign of the times. Over the last year, mortgage lenders have started offering mortgages on different terms, such as lower rates with higher fees, or higher rates with lower fees. It gives people more options.  Loans-to-value have also come down and 100 per cent mortgages are now difficult to source and very expensive.”

To work out your mortgage repayments, visit Defaqto’s mortgage calculator:
http://www.defaqto.com/consumer/mortgages.aspx