29 April 2008
Efforts by the Bank of England to soothe turbulent money markets have not stopped mortgage rates from rising, figures show.
The average rate for a two-year fixed rate mortgage is currently 6.66 per cent, compared with 6.52 per cent on April 21, the day the Bank made its announcement about the help it was making available to lenders.
Two-year variable deals have also increased slightly during the past seven days, rising to 6.65 per cent from 6.64 per cent.
Not only have rates failed to come down in response to last week's £50 billion scheme to help tackle the problems caused by the credit crunch, but rate rises appear to be gathering pace.
When the credit crunch first struck lenders typically increased their rates in increments of 0.1 per cent and 0.2 per cent, but now rises of more than 0.5 per cent are becoming commonplace.
On Friday Halifax and Cheltenham & Gloucester both announced they were increasing their rates by up to 0.6 per cent for people who take out a mortgage through an intermediary, while Britannia Building Society hiked all of its fixed-rate deals by up to 0.75 per cent.
Lenders are also continuing to tighten their lending criteria, with Nationwide Building Society limiting lending to new customers with only a 5 per cent deposit to just two of its products.
Council of Mortgage Lenders, spokeswoman, Sue Anderson, said the injection of money into the market by the Bank of England was not an instant process and it would take time before it impacted the rates lenders charged. Ms Anderson said: "It is a relatively complex scheme and it will just take time to work through."
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