Home owners have suffered another setback with the news that three major lenders have announced that they are to increase their fixed mortgage rates.

Nationwide, NatWest and Santander have all announced rate hikes, due to increased uncertainty over when the Bank of England plan to cut interest rates, currently at a 16- year high of 5.25%.

Santander started the ball rolling with a number of fixed and tracker rate increases, including a residential fixed rates rise by between 0.04% and 0.2% for all buyers and remortgage customers.

All buy-to-let fixed rates rose by up to 0.25%

NatWest soon followed with a  0.22%  rise across a range of residential and buy-let fixed rate mortgage deals./

While Nationwide said that they would increase rates on several of its foxed rate deals by 0.25%.

It’s bad news for those who are currently have fixed rate mortgage deals that are about to expire, as they are relatively cheaper compared to what has been announced.

Also as the three lenders who have revealed their rate increases are big players on the mortgage market, it might trigger other banks and buildings to follow their moves.

Mortgage holders should wait for the news from the Bank of England, who will announce its next interest rate decision on May 9.


House prices fall

Nationwide’s latest figures for April showed that house prices fell in April by 0.4% compared to the previous month.

The average home now costs £261,962,  which is  4% below the peak in the summer of 2022 when house prices benefited from the fall out of the Covid-19 pandemic.

The rise in the cost of borrowing as interest rates hikes have continued were blamed for the fall in house prices.

According to Moneyfacts the average two-year and five-year fixed rate stood at 5.91% and 5.48% respectively on May 1.

This is the highest it has been since January, and is also higher than the 5.80% and 5.39% respective average two-year and five-year fixed rate at the beginning of April.

As this year progresses average interest rates have increased.

Yet according to the Bank of England’s Money and Credit figures there were 61,300 mortgage approvals for house purchases in March,, which was up from 60,500 in February.

This was the sixth successive month that the number of mortgage approvals have risen.


How to lower mortgage payments

If you are feeling the pinch of the current high living cost environment, the HomeOwners Alliance has revealed several ways that you can lower mortgage payments.

The most expensive mistake that many mortgage holders make is staying on a standard variable rate mortgage, as they are invariably higher than the introductory rate whether it be a tracker or fixed rate if it has expired.

You could also switch to a interest rate only mortgage, where you would only pay the interest on the loan for the mortgage.

This would be a more suitable to someone who did not have a steady income, but had lump sums available either through for example lump sums or an inheritance.

Asking for an extension on your mortgage would reduce your mortgage payments, but the downside is that taking this route will increase the amount of interest that you would pay over a longer period of time.

Another option is to look for a cheaper mortgage deal, by switching from your current deal, and then remortgage onto a more economical arrangement.

In the long term you can cut your mortgage payments if you can make overpayments.

But make sure that there are no penalties if you were to choose this path and speak to your mortgage lender.

Also make sure that there are no other loans or credit cards that need dealing with first.

An offset mortgage is another route you can take, where the mortgage is linked to a savings account,  the balance on these savings are used to cut the interest charged against the mortgage, which is where you can save.

If you are really struggling to keep up with the mortgage payments the check with your lender over the possibility of a mortgage holiday.

This is when your mortgage payments will be paused over an agreed period of time

Yet this does mean that mortgage arrears will be chalked off or that your mortgage lender will cover any payments.

If your lender agrees to the payment holiday then the debt will be deferred to a later date.

Although be warned that interest will build on your mortgage debt, so when you restart payments the monthly amount will be higher.