The cost of fixed rate mortgages continued to rise this week, despite the Bank of England cutting rates at the start of the month.
An analysis of market movements this week by Moneyfacts shows that two-year, three-year and five-year fixes all increased across the vast majority of LTV bands as swap rates remained volatile.
The largest increases occurred on the five-year market, where rates rose by 0.06% (on average across all LTV bands). Meanwhile, the average two-year rate rose by 0.04%, while there was a more marginal increase in the average three-year rate, up just 0.01%.
In the three-year fixed rate market, loans up to 95% LTV saw a slight price decline this week, with a decline of 0.02%, the only range in these different categories to break the prevailing uptrend.
Moneyfacts spokesperson Caitlyn Eastell said building societies had been the most active when it came to rate changes this week, announcing rate cuts and increases as well as product withdrawals and launches.
However, Eastell pointed out that a handful of Britain’s largest mortgage providers have also changed their product ranges. “Prominent brands increasing selected fixed interest rates this week included Virgin Money by up to 0.15%, Royal Bank of Scotland by up to 0.10% and NatWest by up to 0.10%,” she said.
Moneyfacts said a slew of building societies had adjusted their fixed prices. Some of the biggest increases were seen at Progressive Building Society (by up to 0.54%), Hinckley & Rugby Building Society (by up to 0.44%), Saffron Building Society (by up to 0.40%), Melton Building Society ( with a maximum of 0.40%). 0.39%), West Brom (up to 0.20%), Suffolk Building Society (up to 0.20%) and Skipton Building Society (up to 0.20%) 0.14%).
Eastell added: “With inflation again rising faster than expected earlier this week, this may also dampen hopes for possible rate cuts early next year. It remains uncertain when widespread reductions will make their return.”
Despite this more pessimistic outlook, Moneyfact pointed out that a number of “eye-catching deals” emerged in these product innovations this week. This includes a two-year fixed rate deal from TSB, priced at 4.59% and available at 80% loan-to-value for home buying customers. Moneyfacst says the deal charges a reasonable product fee of £995, which is offset by a free valuation incentive.