Home buyers hit as mortgage rates triple

MORTGAGE interest rates in Guernsey from some banks have tripled this week, with rates of more than 6% now on offer.

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There also were notably fewer deals available from many of the banks, but many were quick to confirm they would not be following Skipton Building Society, Virgin Money and Bank Of Ireland in the UK, which have halted mortgages for new customers.

Mawson Collins residential sales manager Esther Jones said the rate rises had already been having an impact on sales.

‘We’ve had some sales fall through, as they’ve agreed with the bank what they can borrow, but when they have gone back they could not borrow as much as they thought they could,’ she said.

Pierre Blampied, managing director of mortgage broker SPF, warned that interest rates were likely to continue to rise.

‘I think it will peak next year, but it’s working out what the peak will be,’ he said.

‘The market is predicting between 5 and 6%. 2024 will see a general election in the UK and that’s when I believe we will see rates drop.’

Lloyds is the market leader in Guernsey for mortgages. As of August, it had been involved with 217 of the 532 bonds issued this year.

It was popular due to its competitive rates. Last month a two-year fixed deal with a 60% LTV was 1.25% and a tracker with up to 75% LTV was 0.9%, plus base rate. Its latest offers, published this week, showed that the same fixed deal would be 4.24%, while the tracker is 1.5% above base rate.

A bank spokesman confirmed it had updated its deals to reflect the changes to market rates over the summer.

‘We regularly review the mortgages we offer to customers and will continue to make changes as appropriate in light of market conditions,’ he said.

Barclays is now offering some of the highest mortgage rates in the island.

Last month it offered a five-year deal for 60% LTV at 1.99%, with a £999 fee.

But from yesterday the comparable deal was at 6.29%, although the fee has been dropped.

The bank had offered two-year fixed deals until recently, but now it only lists two-year tracker deals on its website.

The bank had been Guernsey’s fourth-most popular mortgage bank this year. Attempts to seek comment were unsuccessful.

The industry was concerned by the UK Government's mini-Budget last week and expected the Bank of England to increase its base rate to at least 2.25%. Devaluation of the pound has also unsettled markets, but hopes were being expressed that rates, and the market, would settle soon.

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