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Millions face swelling mortgage bill as lenders brace for rate hike

London house prices are falling faster than the rest of the country
London house prices are falling faster than the rest of the country

Households across the UK face swelling mortgage costs on top of higher tax bills and an increasing cost of living.

Several of Britain’s big players in the mortgage market lifted interest rates on their products immediately after the budget this week in anticipation of a looming rate hike from the Bank of England.

HSBC, Barclays and TSB hiked rates on mortgage products immediately after the budget, triggered by growing concerns over inflation and tax rises worsening the cost of living.

Financial markets are fully prices in for a 0.15 basis point rate raise by the Old Lady at next week’s rate setting meeting.

Threadneedle Street’s new chief economist, Huw Pill, expects inflation to top five per cent, while the government’s fiscal watchdog, the Office for Budget Responsibility warned this week it will peak at 4.4 per cent by the middle of next year.

The Bank of England could act to hose down runaway inflation that is permanently above its two per cent target.

Barclays hiked its rates by as much as 0.35 of a percentage point. A two-year fixed mortgage at 60 per cent loan to value with a £999 fee will now cost 1.26 per cent, up from 0.91 per cent, and a five-year fixed mortgage will cost 1.57 per cent, up from 1.22 per cent.