Smaller mortgage lenders raise their rates

Some lenders could be poised to raise mortgage rates as intense competition in the sector starts to hit their bottom line.

The warning came from mortgage brokers and property experts in response to rate rise announcements by the West Bromwich Building Society and the Bank of Ireland. In recent months, acute competition and the launch of such initiatives as the government's Help to Buy scheme has helped push down borrowing costs. Some banks have been offering historic low rates as a means to attract business in a pattern reminiscent of the pre-crash market.

However, last week Bank of Ireland raised its base-rate tracker mortgage costs, closely followed by the West Bromwich Building Society bumping its buy-to-let mortgages up by two per cent. The decision was described as "outrageous" by mortgage firm SPF Private Clients. "I would expect customers to fight these decisions," Mark Harris, chief executive of SPF, said.

More rate rises may be on the way, and George Spencer from property company Rentify has some simple advice for borrowers: "If your lender announces that it is raising your rates out of the blue then it's time to move to another bank, possibly on to a fixed-rate deal which will give you some security."