Wholesale Mortgage Ratesmortgage interest rates on wholesale mortgages
More risky first-buyer mortgage loans are also affected. What will cause interest rates to soar? Interest rates on UK mortgage debt are heavily affected by moves in the world' mortgage bond market, which have undergone major changes since the appointment of Donald Trump.
It has increased since the US elections, as it is expected that there will be a recovery in headline growth. The most important wholesale interest rates for fixed-rate mortgages are the "swap rate". Five-year mark-to-market swaps have increased from 0.42 to 0.97 since their low on 10 August after the key interest rates were lowered. Biennial interest rates have increased from 0.38 to 0.67 and three-year rates from 0.38 to 0.77.
Long dated fixed rates are probably the most directly affected by an increase in swing rates.
With Barclays lowering mortgage rates
Mr Barclays said it reduced Friday's rates on its three-year fixed-rate mortgage, selling under its Woolwich mortgage mark, by 0.28 per cent points. As a result, the interest rates for credits of up to 60 per cent of the value of the real estate on which they are based will fall to 5.69 per cent and for mortgage-backed securities with a loan-to-value ratios of 60 to 80 per cent to 6.57 per cent.
A number of mortgage providers have lowered their mortgage charges in the last two month in reaction to a decrease in the price of interest rates swaps utilised by the banking sector to fund fixed-rate mortgages. But mortgage rates are still high and have increased significantly over the past year as affected lending institutions try to save money and safeguard earnings.
Unexpected dehydration in low-cost mortgage financing has driven a 10-year UK housing bubble in the opposite direction, with the creditor report this weekend of a 10.5 per cent drop in housing rates in the year to August, the sharpest in 18 years. "The cost of financing fixed-rate loans is falling and there is increasing competition," said Barclays Head of Mortgage Products Chris Keane on Friday.