Santander has become the first “big six” lender to raise mortgage interest rates this year, following last week’s shock rise in inflation.
However, brokers said the change was unlikely to be the first step in a wave of big price increases.
Lenders started the year with a wave of price cuts, in the hope that the Bank of England would soon cut its own base rate.
However, figures released last week cast doubt on those hopes. Official data showed inflation rose to 4% in December, ahead of economists’ expectations. In the immediate aftermath of the inflation data, Santander cut some selected mortgage rates, but today it has revealed a number of increases.
The bank said that certain rates are set to increase by between 0.05 and 0.2 Percentage points.
Ben Perks, managing director at Orchard Financial Advisers, said: “The constant rate reduction announcements we were enjoying were destined to stop at some point. Swap rates have increased slightly this week, which could be a factor, but hopefully this is just Santander 'turning the tap off' because they priced so competitively last week and have seen an influx of applications. We will see some ups and downs over the coming weeks so borrowers shouldn't be overly concerned.”
Justin Moy, managing director at EHF Mortgages, said: “I suspect the overall trend of rate reductions will continue as predicted, but a few bumps along the way are inevitable.”
Ken James, director at Contractor Mortgage Services, said: “The rate war drum may be broken, or at least temporarily out of order. , The fact that Swap rates have been wobbling is a clear indicator that the tide may have changed, even if it's a temporary shift we need to stay realistic and keep the wheels on the bus.”
