UK households hit with £330 blow as Barclays and Nationwide hike mortgage rates

Both Santander and Nationwide Building Society are increasing their mortgage interest rates. The hikes come days after the Office for National Statistics announced a higher than expected jump in the rate of inflation, the data means the Bank of England is expected to hold off any more interest rate drops.

Santander is increasing fixed rates by up to 0.1 percentage points from Tuesday next week, while Nationwide said it had increased its mortgage rates by up to 0.25 percentage points.

The average mortgage is around £132,378, 0.25% of which is around £330 a year or an extra £28 a month.

Lenders had been reducing rates following the Bank of England's decision to drop rates to 4.25% earlier this month but with inflation rising the prospect of further rate cuts, which had been anticipated, appear unlikely.

Swap rates have also been rising, these tend to be based on predictions of the future health of the UK economy as well as anticipated rate rises or reductions.

News agency Newspage asked brokers and property experts if this is the beginning of a broader repricing, meaning more expensive mortgages, following yesterday's inflation data and ongoing swap rate movements.

Katy Eatenton, and protection specialist at said after the high inflation announcement this week, the decisions were expected. She said: "Although Barclays announced rate reductions today, I think the general direction of rates will be up for the immediate future. We could see a market-wide reprice in the wrong direction for borrowers."

Adam Stiles, managing director at said: "It's no surprise Nationwide have increased their fixed rates on the back of yesterday's unexpected inflation rise. In turn, swap rates, which determine how lenders price their fixed rates, have risen. We expect more lenders to follow suit in the coming days."

Elliott Culley, director at , said more lenders would follow: "Nationwide are not the first and they will not be the last lender to reprice higher based on the latest changes to the economic outlook. With inflation data coming in higher than expected, economists are predicting only one more base rate cut this year, which has resulted in SWAP rates increasing."

David Stirling, director at , said swap rates had been rising before the Bank of England cut rates earlier this month.

He said: "The writing has been on the wall for a few weeks, with swap rates moving upwards, and now lenders being forced to react. Nationwide and Atom Bank have both increased some of their product rates today and, coupled with yesterday's grim inflation figures, it's likely other lenders will swiftly follow suit. Borrowers dithering over booking rates should act now to avoid disappointment. Rates can usually be reviewed before completion and switched if a better deal comes up with their lender."