According to data from the Office for National Statistics (ONS), UK house prices increased by 10 per cent in the year to November 2021, which is an increase from 9.8 per cent in the year to October 2021. The cost of an average home in November stood at £271,000, up from £246,000 compared with the figure from 12 months earlier.
The increase comes at a time when mortgage interest rates have started edging higher following the Bank of England’s increase in interest rates from 0.1 to 0.25 per cent at the end of last year, and calls to the Bank to raise them further following an increase in Uk inflation to 5.4 per cent, reports iNews.
Lenders, including Nationwide and Santander, have announced an increase in the cost of bank rate-linked mortgage deals and their standard variable rate (SVR) of lending by 0.15 per cent from 1 February 2022 to mirror the base rate increases.
Nationwide’s base mortgage rate (BMR) and standard mortgage rate (SMR) deals will increase by 0.15 per cent to 2.25 per cent and 3.74 per cent respectively, while Santander’s follow-on rate, which applies at the end of its base rate tracker deals, will increase to 3.5 per cent. Its standard variable rate will rise to 4.49 per cent.
Many new fixed-rate deals had already factored in the interest rate hike, although further hikes are likely to be in store. Nationwide recently increased the cost of some two, three and five-year fixed-rate deals.
Why are rates increasing?
The Bank of England’s Monetary Policy Committee (MPC) has been under pressure to cool the economy and help to reduce runaway inflation. The Consumer Prices Index (CPI) surged by 5.4 per cent in the year to December 2021, which marks the highest recorded level for decades.
There are fears it will increase further in April 2022 when the energy price cap rises by as much as 50 per cent, resulting in more expensive energy bills for millions of UK households.
