£1,300 a year hike on mortgages on the cards for some homeowners

According to a recent report some mortgage customers could be looking at a rise of £1,300 a year on their mortgage repayments, as a result of the Nationwide raising the interest rates on its mortgages. This is the fifth interest rate hike that the nation’s largest building societies has imposed on mortgages since the start of this year, and this is despite the two base rate cuts that have been applied by the Bank of England since December.

With many banks and building societies struggling to secured affordable finance to fund their mortgage lending, some officials state the consumers are having to pay the price through inflated interest rates on mortgages and other forms of finance. Some homeowners could see their repayments rocket as a result of these increases. It is thought that the increased rates on the two year tracker mortgage with Nationwide will add around £109 per month or £1,308 per year for customers with a £158,000 repayment mortgage.

The Nationwide has also said that one of the reasons for its rate hike is to try and close the doors on new customers, who will find it increasingly difficult to get a mortgage, and this has caused concern for many. One official from the Liberal Democrats stated: ‘There is now a fatal combination of people who are unable to borrow and banks who are unwilling lend. The freezing of the housing market is only likely to further exacerbate the current fall in house prices. Bank lending is now so restrictive there is no guarantee this will make houses any more affordable, particularly for first time buyers.’

One mortgage broker added: ‘Conditions in the mainstream mortgage market are now deteriorating at a frightening speed. Lenders are changing their pricing and/or their criteria at the fastest pace in living memory, and probably ever.’

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