LONDON, June 9 (Reuters) – Mortgage rates in Britain
rose again on Friday as economists warned that rising borrowing
costs would put the housing market under renewed strain.
The average rate on a two-year mortgage deal across the
range of loan-to-value ratios rose on Friday to 5.82%, compared
with 5.30% a month ago, financial data provider Moneyfacts said.
Stubbornly high British inflation data last month sparked a
big jump in market interest rates as investors scrambled to
price in more increases in borrowing costs from the Bank of
England in coming months.
Interest rates offered by mortgage lenders have soared in
response. Late on Thursday, HSBC temporarily withdrew mortgage
products for customers applying via brokers.
“To help ensure that new customers get the best possible
service, we occasionally need to limit the amount of new
business we can take each day via broker services,” an HSBC
spokesperson said.
HSBC said its mortgage products and interest rates remained
available for existing customers.
Rival lender Nationwide Building Society also raised its
mortgage rates on Friday, having already revised them up twice
since last month’s Bank of England interest rate hike.
On Friday, consultancy Oxford Economics predicted a 10%
peak-to-trough drop in house prices, based on the BoE raising
interest rates to 5%.
“This repricing of mortgage products coincides with the peak
period for existing fixed rate deals ending,” said Andrew
Goodwin, chief economist at Oxford Economics.
“This will maintain the squeeze on household finances,
offsetting the boost from lower energy prices. It also suggests
we’re likely to see an increase in financial stress and,
potentially, a rise in the number of forced sales.”
Ratings agency Moody’s on Thursday forecast a 10% drop in
house prices.
British house prices in March were 3% down on their all-time
peak of November 2022, at which point they were 27% higher than
before the COVID-19 pandemic, according to official data.
(Additional reporting by David Milliken
Editing by Frances Kerry and Sharon Singleton)
