Yahoo Finance Britain's biggest lender raises mortgage rates faster than Bank of England
Homeowners will now pay hundreds of pounds more for new mortgages with Britain's biggest bank after it raised prices days before the Bank of England's next interest rate decision.
Lloyds increased some of its fixed-rate mortgages for new customers by as much as 0.81 percentage points yesterday. Meanwhile Halifax raised certain two-year fixed-rate deals by up to 0.6 percentage points, five-year fixes by up to 0.3 percentage points and a ten-year loan by 0.25 percentage points.
A borrower taking out a £250,000 loan would now pay £1,214 a month, up from £1,110 and costing them an extra £1,248 a year, based on the interest rate rising from 2.41pc to 3.22pc.
The rises are significantly more than those made by the Bank of England last month, when it increased the Bank Rate by 0.25 percentage points to 1pc.
The central bank will make its next decision on interest rates next week – if the Bank Rate rises again, high street lenders generally follow suit within days and pass on the increased cost to borrowers.
Mortgage rates have risen as households have grappled with near double-digit inflation. The average two-year fixed-rate is now 3.28pc, up from 2.65pc in March, whilst the average rate of a five-year deal has risen from 2.88pc to 3.4pc in the same period, according to analyst Moneyfacts.
Aaron Strutt of Trinity Financial, a mortgage broker, said the best interest rates were disappearing within days as lenders raised prices.
He said: "Some of the rate increases are pretty huge. The cheapest two- and five-year fixes are now priced around 2.5pc, but they will almost certainly become more expensive over the coming months.
"Lenders are constantly changing their rates and they are not waiting for the Bank Rate to increase before they push up their prices. Brokers are telling clients to get the documents we need back as quickly as possible because the rates we have quoted them are unlikely to be around for long."
Lloyds Bank said the new rates would affect new mortgages taken out, and no rates for existing loans had changed.
Meanwhile banks have neglected to pass on higher interest rates to savers, separate research has shown. Nine in 10 easy access savings accounts now fail to match the Bank Rate, according to analyst Moneyfacts. This means just 13pc of savers are currently earning more than 1pc on their cash. Many high street banks are still offering just 0.01pc interest to savers, experts said.
