Barclays withdraws mortgage deals as Bank of England raises interest rates

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Barclays has announced the withdrawal of some of its mortgage deals as banks struggle with skyrocketing interest rates.

The Bank of England today raised bank rates to 1.75 pc, a move that will signal higher mortgage costs for millions of borrowers on variable rate mortgages.

A major lender, Barclays, has announced that four of its five-year fixed-rate loans will be withdrawn from sale today at the end of the day. Purchase and remortgage agreements are among the bank’s offers.

The Bank of England warned that Britain will enter a recession after it cut interest rates of 1.25 pc. by 0.5 percentage point, the sixth increase in a row. More than two million people will see interest rates rise as a result.

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About 1.1 million homeowners have standard variable-rate mortgages, and another 850,000 have tracker rates. The average standard floating rate is currently 5.17 percent, according to analyst Moneyfacts. Following the increase, a homeowner with a £400,000 mortgage on a tracker rate will see their monthly payments increase by £99 overnight. A homeowner with a £250,000 variable mortgage will see their monthly costs increase by £66.

Over the course of a year, the 0.5 percentage point rate increase will cost these homeowners an additional £792 and £1,188 respectively.

The majority (80 pc) of mortgaged homeowners will be protected by their permanent contracts from the immediate effects of the interest rate hike, but a third of these will expire in the next two years. These homeowners are faced with refinancing at much higher rates than they are today.

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The average rate for a five-year mortgage is 4.08 pc.

Rachel Springall, of Moneyfacts, said borrowers with standard variable rates may want to protect 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 the SVR is 1.22 percentage points, and the cost savings of moving from 5.17 per cent to 3.95 per cent is a difference of around £3,333 over two years. *.

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“A 0.5 percentage point increase over the current SVR of 5.17 pc would add about £1,400 to total repayments over two years.”

Some major lenders have hiked interest rates today and in the days leading up to the Bank of England’s announcement. Leeds Building Society has withdrawn its 3.25 percent solution, while HSBC has increased select deals by 0.25 percentage points.

NatWest and Royal Bank of Scotland on Wednesday raised certain fixed-rate deals by 0.26 percentage points, while Halifax raised some rates by 0.4 percentage points on Monday.

Barclays has been approached for comment.

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