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TODAY'S OTHER NEWS

The great mortgage rate hike finally begins

Lenders have started to withdraw their best mortgage deals in advance of the anticipated hike in base rates, threatening rising costs across the market.

Barclays and Santander will introduce rate hikes this week that will add hundreds of pounds to the cost of new loans.

But this could be good news for brokers as it may spark a remortgaging boom as borrowers rush to lock into today's rock bottom deals before they start rising.

Earlier this month, Bank of England governor Mark Carney stirred markets by warning that interest rates could rise sooner than expected.

Analysts warned that rates would start rising in advance of the first base rate hike, and that already appears to be happening.

If other lenders follow Barclays and Santander, the era of record low mortgage rates could rapidly draw to a close.

This could trigger the next leg of the remortgaging boom,

Almost 24,000 borrowers remortgage their homes in June, up 20% in the year, according to figures from the British Bankers' Association, published on Friday.

This is already a healthy market for brokers, who enjoyed their best month since the financial crisis in June.

Barclays is expected to increase the rate on its popular five-year mortgage from 2.39% to 2.59%, adding almost £250 a year to a £200,000 mortgage.

It is also expected to hike the rate on its 10-year mortgage.

Santander is expected to follow on its heels by increasing rates by 0.1%, with Yorkshire Building Society also considering action.

Simon Tyler of Tyler Mortgage Management, said competition in the mortgage market is still "intense" and some lenders won't be in a rush to raise rates.

But he said borrowers must be alert to the danger. "Household debt is so high, with so many people stretching to repay their mortgages and other credit, that any rate hike is going to be very painful and have a disproportionate impact.

“Remember, wages have barely been rising for years but many people have stretched to get on the housing ladder, often only with the aid of government assistance.

“These people may find a rate hike hard to cope with.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said borrowers shouldn't panic, as any future rate rise could be postponed if the economy slows once more. “Mark Carney has hinted at potential rate rises before yet they haven't happened.”

But Harris added that fixed rate mortgages are unlikely to fall any lower than now. "From today's lows, the only way is up."

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