Lenders continue to increase mortgage rates

by Aaron Strutt

Jan 24 2011

More mortgage lenders have increased their fixed and tracker rates this week as banks say that the cost of borrowing has risen on the back of inflationary pressures. First Direct were the most high profile lender to raise their fixed rate mortgages by 0.4% for borrowers with a 35% deposit. Some lenders withdrew rates totally, but the typical rise was around 0.3%.

Rate increases by many of the best buy lenders have meant that some of the more traditional banks have re-entered the best buy tables. Abbey are one of the few lenders to reduce some of their mortgages and they now offer a two year fixed rate at 2.89% for borrowers with 30% deposit. The arrangement fee is £995 and there is a maximum loan of £550,000. For those with a smaller deposit of 20%, Abbey also have a two year fix at 4.38% with a £995 fee. It has a free property valuation and £250 cash back paid on completion.

There are still some great tracker mortgages available and they will give you the lowest monthly payments. The Bank of China is currently offering one of the lowest base rate trackers at 2.30% and it is available to borrowers with a 20% deposit. The arrangement fee starts at £1295 and the maximum size loan does range. Borrowers wanting 80% loan to value can have a maximum loan of £150,000 and mortgages up to 75% loan to value have maximum loan size of around £1 million. Bank of China also have a Private Bank where mortgages are available to a maximum of £10 million.  The mortgage would need to be secured on a property in a prime area of London.

Aaron Strutt, a broker at Trinity Financial, said: "Many of the lenders have said that the cost of funds has risen and that this is why we are seeing more lenders raise their rates. The number of fixed rate mortgage applications has really started rise this month and one big lender has received around 90% of its applications for fixes."

Friday 21, 2011