UK mortgage rates 'edging up' with warning interest rate hike to lead to even higher costs

The official rate could hit 4.5 per cent after Bank of England policymakers meet next week, reports have suggested.

Lenders appear to be pre-empting the imminent rise by increasing mortgage rates.

Virgin Money increased its rates by as much as 0.3 per cent.

Nationwide hiked the figure by even further as it saw a 0.45 per cent rise.

The Bank of Ireland and Barclays have also boosted rates by around 0.25 per cent.

Rightmove mortgage expert Matt Smith said: “In the past fortnight we've started to see average fixed rates edge up slightly across most loan-to-value ranges.

“This is as a result of the increasing underlying costs of fixed rate mortgages in response to a lower-than-expected fall in inflation in March.”

He added: “Looking ahead, fixed rates may continue to increase a little over the next week as lenders anticipate a Base Rate change on 11 May, but it's likely they will try to keep rates steady, particularly in the first-time buyer ranges, as they continue to compete for home-buyers' business.”

Prime Minister Rishi Sunak and Labour leader Sir Keir Starmer clashed on mortgage rates on Wednesday.

During the last Prime Minister’s Questions before King Charles’s Coronation, Starmer said: “Nearly one million people are paying more on their mortgage each month because his party used their money as a casino chip.

“That is why George Osborne called them economic ‘vandals’ who created a ‘self-inflicted financial crisis’—not for the Prime Minister and his “non-dom thing”, not for the super-wealthy that the Conservatives gave tax cuts to, but for mortgage holders all across the country.

“Does the Prime Minister know how many more people will be joining them on higher mortgage rates by the end of this year?”

Sunak replied: “Thanks to the actions we are taking, the Bank of England is showing that public expectations of inflation have now eased to a 15-month low.

“Consumer confidence is at the highest level since Russia invaded Ukraine and, because of our stewardship of the public finances, we can see a clear way to reduce debt and bring interest rates down.

“The Right Honourable and Learned Gentleman keeps up his habit of quoting former Chancellors.

“We know that our plans will deliver lower inflation and lower interest rates, but we know that his plans just mean more debt, ‘year-after-year-after-year”.

“Those are not my words, but the assessment of the former Labour Shadow Chancellor.”