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Lenders raised fixed mortgage rates before Bank of England hike – Moneyfacts
Lenders have already factored in the majority of the Bank of England’s base rate into fixed mortgage costs, according to analysis.
The average two-year fixed rate has increased by 0.18% since January, Moneyfacts’ data showed.
Average tracker rates have also increased over the same time period, from 1.83% to 1.95%.
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Charlotte Nelson, from Moneyfacts, said: “This sizeable increase to the two-year fixed rate average clearly shows lenders had predicted that a rate rise was on the horizon since the start of the year.
“As a result, by the August announcement, 72% of mortgage rates had already factored the 0.25% rate rise into their two-year fixed mortgage rates during the first half of the year.”
No post-May dip
Many lenders increased rates before May, following expectations the Bank of England would hike in the Spring, rather than delaying a move until August.
Nelson added: “Expectations of a base rate rise were high in May, with the vast majority of providers increasing their rates in anticipation and as a direct reaction to the much higher Swap rates at the time.
“However, the subsequent lack of movement in base rate had little impact on the average two-year fixed rate.
“It seems that instead of reducing rates to their former levels, providers chose to wait and see if a base rate rise was likely.”
Nelson said this was a warning that mortgage rates have been on the rise “without the need of a base rate increase”.