Why mortgage rates are surging again

A string of banks and building societies have put up their rates – just as a report warns that first-time buyers have never had it so bad, writes James Moore. So why are mortgages becoming more expensive, and could there still be cuts on the horizon?

While the majority of recent changes have been to raise interest rates, there has also been movement the other way (PA Wire)

Barely a day after the Building Societies Association (BSA) warned that becoming a first-time buyer was “possibly the most expensive it has been over the last 70 years”, a string of major lenders made it even pricier.

Barclays raised rates across a range of mortgage products by 0.1 per cent, the second increase in a week. NatWest said it would hike some of its two and five-year “switcher” deals for existing customers by the same amount. Certain two, three and five-year fixed rates will be increased by up to 0.41 per cent at the Co-op Bank. HSBC also joined the grim parade.

This has become part of a trend. James Hyde, spokesperson at Moneyfactscompare.co.uk, told me that the average two-year fixed mortgage rate currently sits at 5.83 per cent, which is the highest it has been since early January, when there were signs that borrowing rates were coming down.