Three major lenders are raising mortgage rates amid further volatility in the banking sector.
The global economic turmoil has made mortgage providers reluctant to lend to each other, pushing the rate at which banks lend money to each other higher.
HSBC, Woolwich and First Direct's new rates and deals come into effect on Friday. Other lenders are reviewing their rates.
Mortgage costs had fallen in the past two months.
Search for 'safer' borrowers
HSBC is increasing fixed-rate deals for new borrowers with a 10% deposit by 0.3 percentage points to 6.27%. £150,000 mortgage will now cost £27.46 more a month, or £330 more a year. The lender will also increase fees for some new borrowers only able to offer a small deposit.
The bank wants to attract "safer" borrowers by cutting costs on a fixed-rate deal for those offering a 25% deposit. The 0.2 percentage point drop would take £217 a year off the cost of a £150,000 mortgage.
From 1500 BST on Friday 26 September, its internet arm First Direct will raise its two-year fixed rate deals by 0.2 percentage points.
Barclays' mortgage arm, the Woolwich, is increasing fixed-rate mortgage offers by up to 0.35 percentage points.
It also announced a slight lift in tracker rates for new borrowers.
All change?
Other lenders are expected to follow suit, analysts said. "I think the majority of lenders are looking at the pricing of their mortgages. We could see a lot of changes over the next few days," said Aaron Strutt of mortgage brokers Chase De Vere.
The Yorkshire Building Society raised interest rates on some fixed-rate deals on Monday. From Friday, Abbey is cutting its two-year fixed-rate deals for people with a 15% deposit and adding to the number of three and five-year dealGovernment-owned Northern Rock also told the industry that it was keeping its home loan costs under review. It warned that it could be changing its range at short notice.
Britannia bucked the trend when it cut its interest rates on new deals slightly and David Hollingworth, of London and Country mortgage brokers, said this was likely to be an exception.
"We have to look at the trend of falling rates coming to an end," said Mr Hollingworth.
"It is almost impossible for consumers to try to second guess what is going on when the market does not know."
Swap rates rising
The changes come as swap rates, which influence the cost of home loans, are rising sharply.
Libor, or the London Interbank Offered Rate, is the rate at which banks lend money to each other. The three-month rate has reached its highest level since December, rising well above 6%.
For the last two months, the cost of new mortgages dipped quite sharply, along with the costs to banks of borrowing wholesale funds on the financial markets.
Figures from the Bank of England show that the average two-year fixed-rate deal for those offering a 25% deposit fell from 6.6% at the end of June to 6.08% at the end of August.
Stephen Alambritis, from the Federation of Small Businesses, said that another effect of the banks failing to lend to each other was rising costs for small businesses.
Branch managers were more cautious with overdraft and loan rates to these business borrowers, he said. s.
The global economic turmoil has made mortgage providers reluctant to lend to each other, pushing the rate at which banks lend money to each other higher.HSBC, Woolwich and First Direct's new rates and deals come into effect on Friday. Other lenders are reviewing their rates.
Mortgage costs had fallen in the past two months.
Search for 'safer' borrowers
HSBC is increasing fixed-rate deals for new borrowers with a 10% deposit by 0.3 percentage points to 6.27%. £150,000 mortgage will now cost £27.46 more a month, or £330 more a year. The lender will also increase fees for some new borrowers only able to offer a small deposit.
The bank wants to attract "safer" borrowers by cutting costs on a fixed-rate deal for those offering a 25% deposit. The 0.2 percentage point drop would take £217 a year off the cost of a £150,000 mortgage.
From 1500 BST on Friday 26 September, its internet arm First Direct will raise its two-year fixed rate deals by 0.2 percentage points.
Barclays' mortgage arm, the Woolwich, is increasing fixed-rate mortgage offers by up to 0.35 percentage points.
It also announced a slight lift in tracker rates for new borrowers.
All change?
Other lenders are expected to follow suit, analysts said. "I think the majority of lenders are looking at the pricing of their mortgages. We could see a lot of changes over the next few days," said Aaron Strutt of mortgage brokers Chase De Vere.
The Yorkshire Building Society raised interest rates on some fixed-rate deals on Monday. From Friday, Abbey is cutting its two-year fixed-rate deals for people with a 15% deposit and adding to the number of three and five-year dealGovernment-owned Northern Rock also told the industry that it was keeping its home loan costs under review. It warned that it could be changing its range at short notice.
Britannia bucked the trend when it cut its interest rates on new deals slightly and David Hollingworth, of London and Country mortgage brokers, said this was likely to be an exception.
"We have to look at the trend of falling rates coming to an end," said Mr Hollingworth.
"It is almost impossible for consumers to try to second guess what is going on when the market does not know."
Swap rates rising
The changes come as swap rates, which influence the cost of home loans, are rising sharply.
Libor, or the London Interbank Offered Rate, is the rate at which banks lend money to each other. The three-month rate has reached its highest level since December, rising well above 6%.
For the last two months, the cost of new mortgages dipped quite sharply, along with the costs to banks of borrowing wholesale funds on the financial markets.
Figures from the Bank of England show that the average two-year fixed-rate deal for those offering a 25% deposit fell from 6.6% at the end of June to 6.08% at the end of August.
Stephen Alambritis, from the Federation of Small Businesses, said that another effect of the banks failing to lend to each other was rising costs for small businesses.
Branch managers were more cautious with overdraft and loan rates to these business borrowers, he said. s.
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