Major lenders increase fixed-rate mortgages

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by Kay Murchie

Major lenders have hiked the cost of their fixed-rate mortgages, making them even more expensive for new borrowers.

Santander-owned Abbey, which is the UK’s second largest mortgage lender, has increased the cost of its fixed-rate deals by between 0.25 and 0.5 percentage points.

Furthermore, Lloyds Banking Group is upping interest rates on fixed-rates bought through brokers by up to 0.7%.

The announcement comes a week after the UK’s largest building society, Nationwide, increased the cost of all its fixed-rate home loans by up to 0.86%.

Nici Audhlam-Gardiner, director of mortgages for the Abbey and the Alliance & Leicester, both run by the Spanish bank Santander, said: “Swap rates have increased substantially in May and June and in particular last week. Following competitor moves and further swap rate increases, it has become necessary to increase the rates on some of the deals we offer.”

The latest figures from the Council of Mortgage Lenders showed that fixed-rate mortgages are growing in popularity after more than two-thirds of all new home loans were fixed-rates in April.

Melanie Bien of mortgage brokers Savills Private Finance believes rates have further to go and advises those thinking of opting for a fixed-rate should act as quickly as possible.

In related news, financial website, Moneyfacts, has named HSBC as the winner in the Best Remortgage Provider; Best First Time Buyer Mortgage Provider and Best Bank Mortgage Provider.

The 2009 awards were presented in London last week at a ceremony that recognises the best products and services in the personal finance world.