Speculation of a rise in Bank Rate has driven some lenders to increase their pricing
Recent comments from Bank of England Governor Mark Carney suggest that a rise in Bank Rate “will likely come into sharper relief around the turn of this year”.
Responding to the comments, Money Supermarket’s consumer expert Dan Plant said:
"The recent rate rise speculation is starting to make providers cautious, and this is being reflected in their offers”.
However, Brian Murphy, head of lending at Mortgage Advice Bureau said:
“Any product re-pricing that has taken place in the last couple of weeks may also have been tactical, where one or two lenders have come under pressure from things like service. But as yet I don’t see this being the start of a significant rate rise occurring.”
Whilst this may be true in the residential mortgage market, buy to let rates are still at an all-time low. According to the July results of the Buy to Let Product Index by Mortgages for Business average fixed and tracker rates continue to drop month-on-month. It will be interesting to see whether this changes in August.
Referring to the wider mortgage market, Carney said that with interest rates set to rise, over half of UK mortgagors would pay higher rates in a year’s time, and close to three-quarters of mortgagors would start to pay more in two years’ time.