Banco Santander (LSE:BNC) has upped its mortgage rates just as the Bank of England’s chief economist Huw Pill warned rate-setters are worried about ‘sticky inflation’.
Spanish-owned Santander upped fixed rates for new buyers and remortgage customers by up to 0.29% from today with specific buy-to-let rates going up by 0.31%.
Variable tracker borrowers however will see their rates drop after last week’s base rate cut to 4.75%.
Santander, which says most customers are on fixed deals, joins TSB, Virgin Money and Nationwide in raising rates following a jump in swaps or wholesale rates that are the basis of mortgage pricing.
These have risen following Chancellor Reeves’s Budget and the election of Donald Trump, both of which are expected to push up borrowing.
Pill said further easing by the Bank of England was likely to be a “gradual process” even though the reduction in UK inflation over the past year had been substantial.
“As we saw in the labour market data that was released this morning, pay growth remains quite sticky at elevated levels and levels that, given the outlook for productivity growth in the UK, are hard to reconcile with the UK inflation target,"
An average 2-year fixed residential mortgage rate today is 5.43% today, up from 5.42% yesterday, said Moneyfacts with a 5-year fixed residential mortgage at 5.16%.