30 May 2008 / by Joy Tibbs
While many analysts believed mortgage rates could finally be in decline, two of the UK’s biggest lenders – Abbey and Woolwich – have decided to raise their interest rates.
Despite having cut some fixed rates by 0.17 per cent on May 16, Abbey has now upped its rates on fixed-rate mortgage deals by between 0.15 per cent and 0.56 per cent. The changes take effect on May 29th and are likely to be met with disappointment by prospective homebuyers.
Meanwhile, Woolwich has increased several two-year fixes sold through intermediaries by 0.1 per cent, and certain 10-year fixed rates by up to 0.3 per cent. Woolwich, which is the mortgage division of Barclays, will also implement the new rates from today.
There has been relatively little change to mortgage rates in recent weeks, and Abbey joined Nationwide at the top of John Charcol’s ‘best-buy’ mortgage table on May 26. Abbey recently reported a rise in popularity for its five-year fixed-rate mortgages.
Commenting at the time, director of Abbey mortgages, Phil Cliff, said: “Opting for a longer term fix rate mortgage will provide mortgage borrowers with financial security in uncertain economic times. He added: “For borrowers who do want to fix for five years, there are some very competitive deals out there at the moment.”
However, Moneyfacts has discovered that last year, there were 15,000 mortgage products on the market, while there are now just 3,814 available. And while prospective buyers would have had 30 days to make up their minds about a deal last year, deals are now only available for an average of just 11 days.
In response to the rise in Abbey rates, head of mortgages at moneyfacts, Louise Cuming, said: “While swap rates have risen by around half a per cent in the past month which could justify this hike, Abbey is only adding to confusion and volatility by reducing rates on fixed deals last week only to raise them again this week.
“When providers act with such disregard for consumer confidence, they aggravate the situation by driving more homeowners to a ‘wait and see’ approach. Borrowers need to be regaining trust in providers and the housing market as a whole, or we will face the unwanted prospect of further market stagnation.”
©Fair Investment Company Ltd