Halifax lifted its home loan rate by 0.46 of a percentage point to 8.1 per cent. It will announce higher savings rates in a few weeks, but National Savings increased some fixed rates by the full 0.5 percentage point of last week's base-rate increase.
The 41st Issue Savings Certificate at 5.4 per cent is being replaced today by the 42nd Issue at 5.85 per cent. The Capital Bond rises by half a point to 5.75 per cent, and the First Option Bond rises by 0.4 of a point to 6.4 per cent, or 6.8 per cent for sums over pounds 20,000. Variable rate counts are not being altered.
The competition for savers' cash will force all mortgage lenders to raise rates. Some were reluctant to follow the lead set last week by Abbey National and Nationwide Building Society, for fear of damaging the fragile housing market.
The moves end the faint hope that Halifax, with 1.8 million borrowers, would also resist any rise or make a nominal move.
Woolwich Building Society, which said last week that it did not want to raise rates and risk damaging the housing market, said it was considering its position.
Ian Darby, marketing director of John Charcol, the mortgage brokers, said: 'I would be very surprised if others did not follow.'
Gary Marsh, head of corporate affairs at Halifax, said: 'We argued very strongly against the base-rate rise. It would have been nice not to have moved at all. But, given the competitive market, the decision had to be taken.'
The cost of a pounds 50,000 repayment loan will increase by pounds 13 a month. The range of discounts - of between 4.65 per cent for one year and 1.3 per cent for three years - remains in place.
Only Northern Rock Building Society, which is raising its mortgage rate to 8.14 per cent, has announced increases in rates for savers. They range from 0.1 to 0.4 of a percentage point and favour savers with larger balances.Reuse content