Lenders increase cost of fixed-rate mortgages

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by Lin Freestone

Three mortgage lenders have raised the cost of their fixed-rate mortgages as banks find it increasingly difficult to finance loans.

Bradford & Bingley has increased the cost of its fixed-rate residential mortgage by between 0.5% and 0.7%. This is the second increase imposed by the building society in 20 days.

A two-year fixed deal from First Direct has risen by 0.16% to 6.15%. The Co-operative Bank has increased its three-year fixed rate by 0.7%, and its five-year rate by 0.9%.

Bradford & Bingley has also increased its buy-to-let deals by 0.3%. Its fixed-rate self-certification mortgage rates have risen by 0.95%.

A new fee-free three-year tracker is being offered by the Co-op to its current account customers. The rate is 5.99% for mortgages for customers with a 25% deposit, and 6.24% for those with a 10% deposit.

Two days ago it was revealed that the average cost of a two-year fixed rate mortgage broke through the 7% barrier to hit 7.02%. This is its highest level since 1997.