Nationwide customers may face £360 blow | Personal Finance | Finance

Households are facing a fresh mortgage squeeze after the world’s biggest building society hiked the cost of selected new fixed-rate deals.

The increase of 0.25 of a percentage point means the cost of a new home loan of £200,000 would be around £30 a month more – £360 a year – than before the change.

The rise, which takes effect from today, affects a raft of deals for both new customers and existing borrowers looking to move home.

Switcher and additional borrowing rates are spared for now, but experts fear this may only be a temporary reprieve.

News of higher than expected UK inflation has led many finance experts to scale back predictions of interest and home loan rate cuts through this year.

David Stirling, of Mint Mortgages & Protection, said the increase by Nationwide was no surprise, warning: “The writing has been on the wall. Swap rates – which underpin fixed mortgage pricing – have been climbing steadily.”

Mr Stirling added: “Borrowers dithering over locking in rates should act now. Nationwide and Atom Bank have made the first move. Others will follow. This is the start of a market-wide reprice.”

Katy Eatenton, of Lifetime Wealth Management, agreed: “It’s clear the overall trend is upwards. We could be facing a much broader correction – and not in borrowers’ favour.”

Elliott Culley of Switch Mortgage Finance, told Newspage: “Nationwide won’t be the last to hike. The economic outlook has changed. Many were banking on multiple base rate cuts this year – that now looks wildly optimistic.”

Just a few weeks ago, homebuyers and remortgagers were enjoying rates as low as 3.8%. Now, the best deals are vanishing fast, with average two- and five-year fixes already above 5%.

Brokers are urging would-be buyers and those coming to the end of their deals to act fast. Many lenders allow borrowers to lock in a rate up to six months in advance, offering some protection against further increases.

Aaron Strutt of Trinity Financial warned: “If you’re looking to buy or remortgage, don’t wait. Secure a deal now – you can always switch to a better one later if rates drop again. But if they don’t, at least you’re not paying more than you have to.”

With inflation stubbornly high and government fiscal policy under fire for stoking prices, analysts say mortgage pain may be far from over.