Budget & Saving

Mortgages rising as loans fall

Mortgage rates are going up for home-owners - but it's not all bad news, as the cost of unsecured borrowing is continuing to fall back thanks to strong competition in the sector.

Interest rates charged on a five-year fixed rate mortgage are now up for the third consecutive month - now averaging 5.17%, up from 5.03% two months ago, the bank said.

For people with a 25% deposit to put down, the cost of a two-year fixed-rate deal has nudged 3.72% after high inflation led to predictions that interest rates would rise quicker than first anticipated.

Rates charged on a two-year tracker for someone taking out a 75% mortgage on the value of a property also hit a five-month peak, 3.54%.

Mortgage demand has spiked of late as people hanging onto low standard variable rates look to deal themselves in before the base rate starts to climb.

Interest on a personal loan of £5,000 fell for the third month in a row - it's now at 13.46% - while rates on £10,000 borrowings fell 0.3% to 9.17%, a two-year low.

This kind of competition has been on the go since the turn of the year, with rival lenders undercutting each other's rates.

Sam Jackson

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