Absolute carnage as High Street lenders such as Halifax and Santander once again raise mortgage rates.
Last night, Halifax informed brokers that the rates it offers for remortgaging properties will be increasing by up to 0.54%.
The extraordinary wave of upheaval that has been plaguing the mortgage industry shows no indication of abating, as evidenced by the fact that a number of prominent High Street lenders have once again raised the interest rates on their various home loan products today.
One broker called the latest round of repricing by Britain’s largest mortgage lender, Halifax, as “absolute carnage.” Halifax led the charge with this latest round of repricing. Additionally, the prices of the goods offered by TSB, Lloyds, and Santander, in addition to a number of the most prominent building societies, were raised once more.
Yesterday evening, Halifax informed its intermediaries that starting today, its rates for remortgages will be increasing by as much as 0.54%.
“Such moves, coming days after the government’s much-publicized Mortgage Charter, are a bit like an Australian cricketer in that they are within the letter of the law but probably not the spirit,” said Rob Gill, managing director of Altura Mortgage Finance, situated in Liverpool Street. There is a significant gap between the interest rates that Halifax offers for purchasing a home and those that it offers for refinancing. In addition to this, they have significantly improved their product transfer rates for all of their existing customer changes.
An consultant at Trinity Finance named Amit Patel described the situation as “absolute carnage.” Halifax has come to the conclusion that the best way to protect its loan book and fulfil its existing responsibilities to its depositors and borrowers is to effectively price itself out of the market. This is the new normal, and there does not appear to be an end in sight, unless the Bank of England begins to lower the base rate, which does not appear likely.
The most recent developments took place a day after the benchmark of a 6% average for a fixed rate mortgage on a five-year term. The most recent statistics from researchers at Moneyfacts shows that five-year packages are currently at 6.02%, while the average for two-year goods has increased to 6.51% from 6.47%.
According to Paul Welch, Chief Executive Officer of Isle of Dogs-based LargeMortgageLoans.com, “As long as SWAP rates, which are the rates that banks pay to borrow money, remain high, fixed mortgage rates will continue to rise.” Interest rates and SWAP rates will continue to climb higher and higher if the core inflation rate does not drop by a large amount this month, or if, heaven forbid, it actually rises.
“It does not give me any pleasure to say that we could realistically see some fixed rates reach 7% before the summer is over,” the author says. “But that is exactly what could happen.”
The prices at the upper end of London’s prime property market, however, appear to be relatively immune from the continuously rising cost of debt. This is largely due to the fact that a huge number of buyers do not require financing.
Prices only decreased by 0.2% in the second quarter of the year, according to the most recent numbers from realtor Savills. This leaves values 3.9% higher than they were before the pandemic.
The established prime areas that are most identified with equity-rich buyers are holding up the strongest despite the turmoil in the mortgage market, according to Frances McDonald at Savills. Even while the prime market in London is continuing to perform better than anticipated, the most recent increases in interest rates are likely to put a strain on buyer budgets and enhance price sensitivity. This is especially likely to occur in the more domestic outer prime districts, where a greater number of purchasers are dependent on borrowing.
“Sellers will need to price pragmatically in order to align with the prevailing buyer expectations.”