Yahoo Finance 'Mind-boggling': Mortgage brokers shocked as Barclays ups interest rates but TSB cuts
Mortgage experts were taken by surprise this week high-street bank Barclays opted to increase its mortgage rates on the same day as reductions were announced by TSB.
The price changes came soon after inflation fell to 2.3%, which brings it closer to the Bank of England’s target level but was higher than economists had expected, taking a June interest rate cut off the table. The figures most closely watched by the Bank’s rate-setting Monetary Policy Committee - core inflation and services inflation - were little changed and well above the levels that the Bank hopes for.
The reaction in the mortgage this week has been mixed, as lenders like Halifax and TSB reduced their interest rates, but Barclays increased its own.
The changes were announced yesterday and come into effect today.
The changes from Barclays include upping its two-year fixed-rate 75% mortgage with a £1,999 product fee from 4.75% back above the 5% mark.
Michelle Lawson, director at broker Lawson Financial, told industry news service Newspage: “A Barclays increase after a TSB decrease is mind-boggling.”
But Rob Gill, managing director at Altura Mortgage Finance, said: “These rate hikes from Barclays are no surprise after yesterday's disappointing inflation figure.
“The surprise is that other lenders cut rates just hours after interest rate markets slashed the chance of a June base rate cut. Borrowers and brokers alike will watch closely to see how this tug-of-war plays out.”
City markets see September as the most likely date for the Bank of England to start cutting interest rates after its cycle of 14 consecutive rises ended last year. However, August remains a strong possibility too, as does a wait all the way until November. A cut in June, just before the election, is seen as only a one-in-14 shot.
