By Andy Bruce
LONDON (Reuters) – Britain’s largest mortgage provider Halifax will ramp up interest rates for new home loans on Wednesday, according to pricing provided to brokers, the latest major lender to do so in response to soaring funding costs.
Unexpectedly strong British inflation data last month sparked a big jump in market interest rates as investors scrambled to price in more increases in borrowing costs from the Bank of England in coming months.
The decision by Halifax, part of Lloyds Banking Group, comes after rivals like Nationwide Building Society announced hefty increases to mortgage rates.
The moves had echoes of a more severe temporary shutdown of the mortgage market in late September and early October last year, sparked by investor reaction to former Prime Minister Liz Truss’ economic agenda.
According to Halifax’s latest product guide for brokers, the rate on a two-year deal with a loan-to-value (LTV) ratio of up to 60%, available for a 999-pound ($1,242) fee, will rise to 5.36% on June 7.
The guide for June 1 showed a rate of 4.54%.
A Halifax spokesperson confirmed it was raising rates.
Two-year deals rather than five-year deals are currently popular among borrowers who hope that rates will fall again soon.
“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.
Property website Rightmove said on Tuesday this was the first week since January that rates have averaged 5% or more across all LTV brackets.
($1 = 0.8047 pounds)
(Reporting by Andy Bruce; Editing by Lisa Shumaker)
