Fixed Mortgage Rates Change Almost Once A Week
HBOS is leading the way with 19 changes to its two-year fixed rate so far in 2008. Abbey and Lloyds TSB have changed theirs 15 times. The link between mortgages and the Bank of England base rate is fast disappearing.
Since the beginning of the year HBOS has changed its two-year fixed mortgage rate an amazing 19 times.
HBOS is Britain’s biggest mortgage lender, as owner of Halifax and the Bank of Scotland. It has a 20% share of the mortgage market, worth £220bn.
Some changes have been decreases, but these are far outweighed by the number of increases. Only Leeds Building Society has changed its rate more often – 22 times. Abbey and Lloyds TSB have made changes to their rate 15 times in the same period. These have a 9.4% and 8.8% share of the market respectively.
First Direct, the internet branch of HSBC, increased its two-year fixed rate earlier this week by 0.5%, from 5.49% to 5.99%. It would add £46 a month onto the repayments of a £150,000 loan.
Nationwide also increase their two-year fixed rate this week, going up from 6.45% to 6.95%.
Woolwich withdrew all of its two-year fixed rates this week, as it was having problems with the number of customers.
For the 1.5 million mortgage holders due to come off fixed rates this year, the continuing rise in mortgage rates will come as a bitter blow. The lowering of the Bank of England base rate from 5.75% last November to its current rate of 5% has not been reflected in mortgage rates. The link between mortgages and the Bank of England base rate is becoming less and less tangible – certainly when the Bank rate comes down or doesn’t move. Lenders are blaming the high cost of borrowing money for the rises.
In addition arrangement fees are adding extra costs to mortgages.
Britannia Building Society has added the most to the cost of a mortgage this year, adding £2,761 to the cost of a two-year fixed rate for a £150,000 loan. Halifax’s arrangement fees have gone up from £499 to £1,499. A spokesman said that they priced in line with the market and in tune with demands made on them by increasing costs in the money market.
