Building societies had already started to increase the cost of fixed rate mortgages in the run-up to the Bank of England interest rate rise.

Nationwide and Barclays are among the country’s biggest lenders to raise rates on some of their fixed-rate products.

The Bank of England hiked interest rates for the first time in a decade on November 2, lifting the base rate from 0.25 per cent to 0.5 per cent. Governor Mark Carney signalled more rate rises could follow.

Experts are saying it is the end of rock-bottom mortgage rates which have helped first-time buyers get onto the property ladder and benefited millions of homeowners.

“My advice would be to review your mortgage because there are still some cracking two, three, five and six-year rates available at record low levels.”

Chris Schutrups, managing director of The Mortgage Hut

What is happening?

Barclays increased its two-year fixed rate by 0.2% on Friday October 6.  Nationwide hiked a five-year fix by 0.9% and, less of a jump, a two-year deal by 0.16 per cent.

About 20 lenders have raised rates or pulled deals since September 21, including Halifax, Santander and Yorkshire Building Society. The rises pre-empted the Bank of England’s decision to double the base interest rate to 0.5% this month (November).

About 11 million people have benefitted from rock bottom mortgage rates since the Bank of England cuts its base rate to 0.5% following the financial crisis and then to 0.25% last year.

A fierce price war between lenders and a low base interest rate saw deals fall to record-low levels. Millions of home buyers have had their pick of cheap fixed deals but this looks set to end.

In September, Bank of England Governor Mark Carney warned if the economy continued on its current track, then interest rates could rise “in the relatively near term.”

Fixed rate mortgages
Fixed rate mortgages

‘Don’t delay’

Even before the Bank of England increased interest rates, so-called ‘Swap rates,’ have seen a steep rise. The Swap rate is the interest rate charged between banks for lending to each other and often impact on mortgage rates charged to borrowers.  

Wesley Davidson, independent mortgage broker at Fox Davidson, said: “Markets are pricing in the expected interest rate rises as they don’t want to be caught out on a low fixed rate. The money markets shifted in anticipation of the basic rate rise.  

“If someone is thinking of putting in an application for a fixed rate mortgage this week or next, my advice is don’t delay. There is evidence that banks are increasing mortgage rates but there are still some low fixed rates available.”

Chris Schutrups, group managing director of The Mortgage Hut, said the Bank of England’s interest rate rise is aimed at curbing inflation by reducing disposable income and spending.

“A change in interest rates will push up credit card bills, overdrafts and - if you are on a variable rate - mortgages.”

Mr Schutrups said if homeowners have variable rate mortgages it might pay to re-mortgage to a new deal.

 “My advice would be to review your mortgage because there are still some cracking two, three, five and six-year fixed rates available at record low levels.”