Barclays has announced the withdrawal of several of its mortgage deals as banks grapple with rocketing interest rates.
The Bank of England has today raised the Bank Rate to 1.75pc, a move which will signal higher mortgage costs for millions of borrowers on variable-rate mortgages.
One major lender, Barclays has announced four of its five-year fixed-rate loans will be withdrawn from sale at close of business today. Purchase and remortgage deals are among those cut from the bank’s range.
The Bank of England warned Britain will fall into a recession after it raised the rate from 1.25pc by 0.5 percentage points, the sixth increase in a row. More than two million people will see interest rates rise as a result.
About 1.1 million homeowners are on standard variable rate mortgages and a further 850,000 are on tracker rates. The average standard variable rate is currently 5.17pc, according to analyst Moneyfacts. Following the increase, a homeowner with a £400,000 mortgage on a tracker rate will see their monthly payments jump by £99 overnight. A homeowner with a £250,000 variable mortgage will see their monthly costs jump by £66.
Over the course of a year, the 0.5 percentage point rate rise will cost these homeowners an extra £792 and £1,188 and respectively.
The majority (80pc) of mortgaged homeowners will be protected from the immediate effects of the rate rise by their fixed deals, but a third of these will expire in the next two years. These homeowners face having to remortgage at much higher rates than at present.
The average rate for a five-year fixed mortgage is 4.08pc.
Rachel Springall, of Moneyfacts, said borrowers on standard variable rates may want to shield themselves from rising mortgage payments by switching to a fixed-rate deal.
She said: “The difference between the average two-year fixed mortgage rate and SVR stands at 1.22 percentage points, and the cost savings to switch from 5.17pc to 3.95pc is a difference of approximately £3,333 over two years*.
“A rise of 0.5 percentage points on the current SVR of 5.17pc would add approximately £1,400 onto total repayments over two years.”
Some major lenders have raised rates today and in the days leading up to the Bank of England’s announcement. Leeds Building Society has withdrawn its 3.25pc fix, while HSBC has raised selected deals by 0.25 percentage points.
NatWest and Royal Bank of Scotland raised selected fixed-rate deals by 0.26 percentage points on Wednesday, while Halifax raised some rates by 0.4 percentage points on Monday.
Barclays has been approached for comment.