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24th June 2009 Fixed rates on the rise In The Times it is reported that Nationwide Building Society, the UK's third biggest mortgage lender, has increased the cost fixed-rate mortgages for the second time in two weeks. Interest rates on some mortgage deals from the Building Society will jump by half a percentage point from tomorrow. Woolwich, also said it will push up its fixes by up to 0.7 points. Nationwide is increasing more than a third of its rates less than a fortnight after it hit homeowners with an across-the-board hike in the cost of fixed-rates of up to 0.86 points. The average increase by the mutual today will be 0.23 points. However, a five-year fixed-rate deal for borrowers with a 25 per cent deposit has jumped from 5.48 per cent to 5.98 per cent. Halifax and Abbey, Britain's biggest mortgage lenders, Cheltenham & Gloucester, Royal Bank of Scotland and Northern Rock and a number of smaller building societies have all hit borrowers with a sharp rise in borrowing costs too. The banks and building societies have blamed the increasing cost of sourcing wholesale funding from moneymarkets. Two-year swap rates, which dictate the cost of fixed-rate mortgages, have soared from 1.98 per cent to 2.34 per cent in the last month. However the average margins on two-year fixed-rate mortgages are now three times higher than they were before the credit crunch struck at 2.58 per cent, according to Moneyfacts. I completely agree with Moneyfacts research. In 2007, you could find a 2 year mortgage product which was tracking 0.3% under Base Rate. Today, if you have 50% equity in your home and you are looking for a new mortgage product, be prepared to pay 1.5% over Bank of England Base rate. Marc d'Espagnac The Mortgage Specialist Ltd |