Yahoo Finance Lloyds and Santander are first banks to increase mortgage rates
Banks have rushed to pass on higher mortgage costs to millions of customers, just moments after the Bank of England increased interest rates to 0.75pc.
Lloyds Bank said all of its customers on tracker mortgages would pay 0.25 percentage points more “in line with their terms and conditions”. Lloyds confirmed it was assessing what the Bank Rate increase will mean for customers on variable mortgage deals, with customers expected to be hit with higher rates from May. Around a quarter of Lloyds customers have variable mortgages.
Santander said its standard variable rate would rise in line with the Bank of England’s increase to 4.9pc from May, while Barclays said its standard variable rate would increase by 0.25 percentage points, from 4.99pc to 5.24pc, also from May.
HSBC said it was reviewing its deals.
The rise will cost borrowers with £250,000 in outstanding mortgage debt an extra £624 a year, or £52 a month. It is the third time tracker mortgage rates have increased since December, as central bankers attempt to stem soaring inflation, which is now forecast to hit 8pc this year having already reached 5.5pc – the highest for 30 years.
Yorkshire Building Society also announced its mortgages were going up. The mutual initially protected its mortgage customers from more costly monthly bills after the first two interest rate increases, but said this time it was left with no choice but to pass on the cost.
More lenders are expected to follow suit.
Around two million people in Britain have variable-rate mortgages. There are two types: “trackers” and “standard variables”.
Tracker mortgages are linked to central interest rates and rise and fall according to the changes made by the Bank of England, meaning tracker deals provided by all lenders will increase automatically. Lenders are not obliged to move their standard variable rates in line with Bank Rate, but typically do.
Banks also typically pass on higher borrowing costs much faster than they reward savers with better rates.
Just two in five banks have announced higher interest deals for savers since December, despite three separate interest rate rises, according to comparison site Savings Champion. Halifax, Lloyds, NatWest and Bank of Scotland are all still paying interest as low as 0.01pc.
Santander said it was raising interest rates on a number of its savings accounts from April, but only by 0.09 percentage points. Yorkshire Building Society said it would pass on the full interest rate rise to its savers.
