Interest rate rise starts to make an impact as mortgage costs increase

The costs of the majority of mainstream mortgages increased in the final three months of last year.

The news comes from mortgage technology company Mortgage Brain, which says that as of this month for example, the cost of a three year fixed rate mortgage with a 60 per cent loan to value ratio has risen five per cent since October.

Similarly, a 70 per cent LTV two year fixed product now costs four per cent more than it did at the start of October 2017.

The analysis – a breakdown of all main product types in the UK mortgage market for a repayment mortgage – also shows a three per cent rise in the cost of a 60 per cent and 80 per cent two year fixed, and an 80 per cent LTV two year tracker.

The five per cent increase for the 60 per cent three year fixed equates to an annualised rise of £360 on a £150,000 mortgage, and a £252 annualised hike for the 70 per cent two year fixed product.

Even so, most mainstream mortgages are still lower priced than they were three years ago.

“It looks like we’re starting to witness the effects of November’s interest rate rise and previous predictions with slow and steady cost increases being recorded month on month since October 2017” says Mark Lofthouse, Mortgage Brain chief executive.

“So far, the increases have been marginal; however, with further rate increases predicted, we could be starting to see a shift in change in terms of mortgage cost movement compared to the past few years.”


Written by: Houseladder