Nationwide Building Society has hiked the rates on its mortgage range for the second time in as many weeks, adding up to 0.5% on its tracker and fixed rate deals.
No fewer than six mortgage lenders have increased their rates in recent weeks, pointing to rising inter-bank borrowing costs as the cause.
The result is that two year fixed rate deals – by far the most popular type of mortgage on the market – now stand at their highest level for ten years.
Higher price, lower choice
This will have massive implications for buyers whose fixed rate deals are about to expire, as they could see their monthly repayments rise by up to £200 when they remortgage.
Their search for an affordable deal will be further hampered by the fact that the number of available mortgages is dwindling. Barclays’ lending arm, Woolwich, said today that it will be pulling all its two year fixed rate deals from the market.
The news comes just days after Egg confirmed its intention to withdraw from the mortgage market entirely.
New deals are pricier
So how will Nationwide’s latest rate hike affect new borrowers?
Well, anyone with a 10% deposit looking for a two year fixed rate mortgage will have to pay a 0.5% higher rate than if they had applied last week. This will add £600 to the annual repayments on a £150,000 mortgage.
Strangely enough, borrowers with a smaller deposit of 5% will see rates rise by just 0.3%, as the table below shows.
Anyone looking for a two year fix with a 95% LTV and no arrangement fee can now expect to pay an eye-watering 7.65% rate. Hard to believe that Nationwide was offering the exact same mortgage at just 6.65% last October.
Two year fixed rate (£599 fee)
| LTV | New Rate | Previous Rate |
| 75% | 6.55% | 6.25% |
| 90% | 6.95% | 6.45% |
| 95% | 7.25% | 6.95% |
Two year fixed rate (no fee)
| LTV | New Rate | Previous Rate |
| 75% | 6.95% | 6.65% |
| 90% | 7.35% | 6.85% |
| 95% | 7.65% | 7.35% |
Three year fixed rate (£599 fee)
| LTV | New Rate | Previous Rate |
| 75% | 6.35% | 6.05% |
| 90% | 6.75% | 6.25% |
| 95% | 7.05% | 6.75% |
Five year fixed rate (£599 fee)
| LTV | New Rate | Previous Rate |
| 75% | 6.35% | 6.10% |
| 90% | 6.75% | 6.30% |
| 95% | 7.05% | 6.80% |
Not just rates that are rising
The news is similarly bleak on the fees front, with new research from comparison site Moneyexpert.com showing that the number of fixed rate mortgages charging an arrangement fee of more than £750 has increased 14-fold (1,368%) in the last 18 months. During that period, the average fee has risen from £517 to £860 in just 18 months.
As if things weren’t bad enough for mortgage hunters, there appears to be a growing trend towards non-refundable arrangement fees.
Abbey has just introduced a £150 fee on its mortgage range that won’t be reimbursed, following hot on the heels of Lloyds TSB’s £99 levy.
