Nationwide Increases Mortgage Rates

(Telegraph) – NATIONWIDE BUILDING SOCIETY yesterday raised interest rates on fixed-rate mortgages by as much as 0.86 percentage points, as rising wholesale costs put pressure on its rivals to follow suit.

The rise adds £6,450 to the cost of a £150,000 loan over five years.

The rate rises come despite Bank of England policy-makers heightening speculation that interest rates will remain at the historic low of just 0.5 per cent until next year, with Kate Barker, a member of the bank’s Monetary Policy Committee, saying: ‘Our present view is that we think rates could stay low for quite some time.’

In the wake of Nationwide’s move, mortgage brokers warned other lenders would follow suit because swap rates on the wholesale market — where banks and building societies raise much of their funding — have increased sharply in recent days. The two-year swap rate, for example, has gone from 1.97 per cent on June 1 to 2.44 per cent a week later on June 8.

Melanie Bien of Savills Private finance said two-year swaps rates were back to levels last seen in early January. ‘Nationwide has repriced all its fixes accordingly and we expect other lenders to follow,’ she added.

Nationwide is the largest of the lenders to increase rates, but other smaller players, including Yorkshire Building Society, have also done so.

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