Do you know Interest rates are Too High? The troubling situation in the mortgage sector seems to be worsening, with interest rates too high for first time buyers and buy-to-let investors.

TSB, Lloyds, Santander, and a few building societies also increased their costs.

Halifax informed intermediaries that its refinancing rates will rise by 0.54% today and that there is now a huge gap between their buy and refinance rates.

They also drastically increased their product transfer rates for current customers who are switching. The bank is pricing itself out of the market to safeguard its loan book and savers and borrowers.

Unless the Bank of England cuts the base rate, this is the new reality.

Moneyfacts data shows that five-year deals are now at 6.02%, while two-year products are at 6.51%, up from 6.47%. As long as SWAP rates remain high, fixed mortgage rates will remain elevated. If core inflation climbs this month, interest rates and SWAP rates might rise much higher, with some fixed rates hitting 7% by summer. Prime property prices, however, are largely unaffected because a lot of buyers do not require financing.

According to Savills, prices only dropped by 0.2% in the second quarter, still 3.9% above pre-pandemic levels. Savills’ Frances McDonald noted that while London’s prime market is doing better than predicted, the latest rate rises may influence buyer budgets and make them more price-sensitive, especially in outer prime districts where more purchasers must borrow. Sellers will need to price realistically to meet buyer expectations.

First-time buyers and remortgages may suffer harder with rate rises.

The Council of Mortgage Lenders (CML) has urged lenders to help struggling borrowers through payment vacations and other measures.

It is encouraging lenders to “do the right thing” by supporting customers through this difficult time.

However, some experts are concerned that these rate hikes could lead to a further widening of the gap between borrowers who can access cheaper mortgages and those who cannot. High mortgage rates might prevent many from buying a home. Policymakers must act fast to keep mortgages affordable and prevent lenders from pricing people out.

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