UK mortgage deals rise again in ‘incredibly frustrating’ rates reversal

Mortgage rates have risen to their highest level in a month following a re-escalation of hostilities in the Middle East.Several of the biggest lenders including Santander, Barclays, HSBC and Halifax have repriced or withdrawn deals in the past week, with Moneyfacts data showing more than 100 have been removed so far.The ongoing US-Iran war and the closure of the Strait of Hormuz, which is having a major impact on shipping through the vital waterway, led to an increase in oil prices, which in sparked higher energy costs and contributed to raised inflation levels.

Higher inflation tends to mean a likelier chance of raised interest rates, which sees money markets send swap rates – which mortgage prices tend to be based from – higher.Swaps fell quickly after the initial ceasefire in the conflict was announced and as the price of oil fell, but with conflict in the region once more, both have reversed direction.The average two-year mortgage fixed deal on Friday was 5.

59 per cent, having been 5.46 per cent just two weeks ago. Five-year deals have moved in the same timeframe from 5.

48 to 5.61 per cent.Moneyfacts data shows this is the highest price point for an average two-year mortgage deal since 19 June, and since 7 June for a five-year term.

On 1 March, at start of the Iran war, a two-year average fix was 4.84 per cent and a five-year deal was 4.96 per cent, while there were plenty of sub-4 per cent deals on the market – all of which were rapidly pulled.

“It will be incredibly frustrating for borrowers to see rates rise back up to where they were a month ago. The positive progress over recent weeks now feels all but lost, but what the market needs is a period of stability,” said Rachel Springall, finance expert at Moneyfacts.Get a free fractional share worth up to £100.

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Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTopen image in gallery(Getty/iStock)“Lenders have resorted to pulling some deals temporarily to reconsider their pricing plans, with over 100 deals withdrawn from sale in the last week alone.

“Any existing borrower who needs to remortgage this year could lock in a new deal now with their existing lender ahead of time, but it’s also wise to seek advice from a broker to get a good sense of what other deals may be available too. Brokers are an anchor during turbulent times as they can help borrowers keep abreast of changes and be there step by step when going through a mortgage application.”Meanwhile, Barclays mortgage data shows over a third (37 per cent) of mortgage completions in June of this year were made by solo buyers, a huge change in trend compared to previous decades - when only around one in seven (15 per cent) of buyers pre-1980 reported buying a property alone.

In terms of more recent changes, the Barclays research shows the average house deposit value fell by almost a quarter (24.8 per cent) year on year, resulting in homemovers turning to larger mortgages to bridge the gap. The proportion of those borrowing at higher than 75 per cent loan to value mortgages rose from 18.

2 per cent to 22.1 per cent over the past year.Join our commenting forumJoin thought-provoking conversations, follow other Independent readers and see their repliesComments