Lenders are slamming the door on mega-cheap mortgages for fear of an impending rate hike

Ultra-cheap mortgage deals are rapidly disappearing in the face of fears of an impending rise in interest rates.

Nationwide and NatWest are among those lenders who have pulled five-year solid products at under 1 percent price.

The number of loans in this category has fallen by almost a third in 14 days. Mortgage rates fell to a record low this summer as banks and building societies battled to attract customers.

However, analysts assume that the price war may be over. Bank of England Governor Andrew Bailey warned last weekend that interest rates may have to rise to contain soaring prices.

Yesterday, the bank’s chief economist, Huw Pill, said the decision to raise interest rates in November, with inflation likely to be 5 percent early next year, is very lively.

The city is already expecting an increase in the next month. The Bank of England’s key interest rate was cut to an all-time low of 0.1 percent at the start of the pandemic in March last year.

Any increase will hit homeowners with variable tariffs and already struggle with higher energy and food bills.

A 0.5 percentage point increase would add approximately £ 50 per month to the cost of a £ 200,000 mortgage with a 25 year term. A 1 percent increase would add around £ 90.

“It seems inevitable that lenders will start raising fixed rates,” said Andrew Montlake of Coreco mortgage broker.

Any increase will hit homeowners with variable tariffs and already struggle with higher energy and food bills

“The question is whether the Bank of England will keep its nerve or act sooner rather than later.”

Many lenders are starting to raise fixed rates for new customers. David Hollingworth of broker L&C said, ‘Borrowers have had a time when it felt like interest rates were falling ever lower. That move has now taken a quick turn and we are already seeing rising fixed rates. The market remains competitive, but fixed rates will shift as market expectations of a rate hike rise. ‘

Nationwide on Wednesday increased its interest rates for borrowers with a 40 percent deposit.

A two-year rescheduling rose from 0.89 percent to 1.04 percent. Those who fix for five years pay 1.24 percent versus 0.99 percent. NatWest’s five-year offer is 1.02 percent versus 0.97 percent. Halifax and Santander are now the only lenders still offering five-year fixes below 1 percent.

Rachel Springall of Moneyfacts said, “There are still many competitive mortgage deals out there. The lenders currently want a lot of new business. ‘

n THE Mum and Dad bank will have supported almost half of all first-time buyers this year.

Parents are expected to contribute £ 9.8 billion in gifts and loans – an average of just over £ 58,000 per purchase, according to real estate group Savills.

It is said that family members have helped nearly 1.4 million first-time buyers in the past decade.