Mortgage mayhem as Barclays and TSB hike interest rates on home loans

A number of major mortgage lenders have announced mortgage rate increases this morning in a breathtaking blow to first time buyers, home movers and buy to let landlords.

Barclays have increased a number of deals by 0.15 percent, and the TSB has increased rates across their residential and BTL ranges by up to 0.35 percent.

At the same time smaller increases were announced by Leeds BS and Clydesdale Bank by 10am this morning.

Mortgage brokers have slammed the increases, questioning whether they are justified.

Mr Moy continued: "At a typically busy time for home buyers, higher mortgage rates are the last thing borrowers and the property market need. The year started on a high but now the mortgage and property market, much like the weather, is unseasonally bad."

Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, warned: "Rising mortgage rates are sucking the energy out of the property market.

"This is certainly not the direction of travel we had anticipated for this stage in the year. It’s looking ever more likely that the base rate will hold next week and that the outlook for borrowers will be roughly as bright as the UK summer."

Simon Bridgland, Broker/ Director at Release Freedom, said: "The speed of lenders ratcheting up interest rates can sometime take your breath away.

"Businesses need to make a profit, of course, but maintaining profit margins on speculation, at such a pace, is enough to spook your typical mortgage holder.

"Advisers should be reassuring their clients not to hit panic, but to be realistic in what they can afford, as the current rate world is much more normal than many homeowners understand."

The Bank of England is expected to hold the base rate at the current 16 year high of 5.25 percent next week, despite evidence that inflation is back to the 'normal' rate of 2.3 percent. As a result, brokers believe lenders have no pressure to make reductions on home loans.

Stephen Perkins, Managing Director at Yellow Brick Mortgages, said: "Some lenders are playing it safe by slightly increasing rates.

"There is also an element of lenders managing levels of new business through these adjustments as some are struggling with demand for their products and managing to service the level of applications.

"Nothing that has been said in any of the election debates so far has given us much confidence in the direction of travel for the economy. The mortgage and property market appear to be drifting aimlessy right now."

Ben Perks, Managing Director at Orchard Financial Advisers, said the swap rates, which is the interest rates banks charge to lend to one another, have been showing small falls recently. As a result, he suggested that buyers who wait to agree a new mortgage deal might see reductions later in the summer.