HSBC Holdings PLC (LSE:HSBA)’s First Direct was among the latest lenders to cut mortgage rates this week, albeit before a renewed uptick in costs in recent days.
First Direct on Tuesday signalled cuts of up to 0.3% across fixed-rate deals, bringing interest on its five-year 90% loan-to-value down to 4.74%, for instance.
The move followed a string of cuts by Banco Santander (LSE:BNC), Virgin Money and Barclays PLC (LSE:BARC) late last year as mortgage rates receded after sweeping hikes seen from early October.
However, a sell-off in government bonds and corresponding surge in gilt yields this week has prompted a renewed uptick in mortgage rates in recent days.
According to comparison site Moneyfacts, interest on the average two-year fixed mortgage sat at 5.4739% come Friday.
Though this was lower than the 5.4767% seen last Friday, figures showed average rates rebounding from a low of 5.4664% on Wednesday.
Swap rates, which determine mortgages, have risen sharply to 4.5% in line with this week’s bond market sell-off, from below the 4.0% mark in mid-September.
Concern has built that the sell-off, which has been sparked by fears around the government’s plans for high borrowing, stubborn inflation, incoming US president Donald Trump and Bank of England caution, could see interest rates stay higher for longer.