Barclays has become the first major lender to raise its mortgage rates after this week’s disappointing inflation figures led to fears that the Bank of England might not cut interest rates until the Autumn
The banking giant announced a number of product changes today, including reducing some rates, but the majority of its changes, especially for new mortgages, were up. It’s the second time in three weeks that Barclays has announced price increases and reductions at the same time.
The changes come after figures yesterday showed inflation falling more slowly than expected, to 3.2% in March. Services inflation, closely watched by the Bank of England’s Monetary Policy Committee, remained especially sticky at 6.0%.
That led to City traders revising their bets on when the Bank of England will start cutting interest rates. Where June had once been the most likely date, August now appears more likely, and markets suggest an almost 50% chance that the first cut will be in the Autumn or later.
The new prices include the price of a two-year fixed deal with no product fee and a 75% LTV rising to 4.98%. A five-year fix with the same terms is up to 4.8%.
The changes come into effect today (Friday).
Aaron Strutt, head of PR and communications at Mayfair-based mortgage broker Trinity Financial, noted that the changes came after Barclays had mostly been better-priced than rivals.
According to Moneyfacts, the average 2-year fixed residential mortgage rate today is 5.81% while the average 5-year fixed residential mortgage rate today is 5.39%. Both are unchanged from yesterday.
