Mortgages fixed rates continue to increase as lenders fail to pass on the cut in base rate. It is now three months since the Bank of England last cut the base rate and we would expect to see the cost of fixed rate deals starting to fall, but this isn't the case. In fact the opposite is true, with rates continuing to rise.
Borrowers hoping to fix their mortgage repayments for three years are being hardest hit, with the average rate now standing at a staggering 7.25%. Two year fixed rate deals have also not being immune, with the average increasing to 7.07%.
Source: Moneyfacts.co.uk - 7.07.08
Some lenders, including Abbey and Cheltenham & Gloucester have recently announced cuts in their fixed rate deals. However, Halifax has increased rates by up to 0.20%, while NatWest and Royal Bank of Scotland have increased rates by up to 0.40%.
It is an extremely worrying time for anyone coming to the end of a fixed rate deal. Borrowers coming to the end of a three year fixed rate deal, looking to fix for another three years could see a £158.23 increase in their monthly repayments (on a £150K mortgage), equating to an additional £5,896.28 in true cost over the three years.
There doesn't appear to be any let up in the misery for borrowers. Lenders need to start playing the game fairly and pass on the cut in swap rates as quickly as they pass on the increase.
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