The Nationwide Building Society has raised rates for existing variable rate borrowers following the second interest rate hike by the Bank of England in three months.
The mutual says its base mortgage rate and standard mortgage rate products will increase by 25 basis points to 2.50% and 3.99%, respectively. The increase will come into effect on March 1.
It adds that customers with follow-on agreements will see the cost of their loans increase by 25 basis points, as set out in their mortgage agreements, also from March 1.
The move comes after the Bank of England’s Monetary Policy Committee raised its key rate from 0.25% to 0.5% to combat rising inflation.
Inflation currently stands at 5.4%, driven by rising gas and electricity costs, well above the Bank’s 2% target.
The Bank added that it expects the consumer price index for the cost of living to peak at 7.25% in April, about 2% higher than forecast in its November report.
This latest central bank hike follows an unexpected hike in December, when the key rate fell from a historic low of 0.1% to 0.25%.
Nationwide reports that its base mortgage rate is the return rate for company mortgages taken on or before April 29, 2009, while its standard mortgage rate is the return rate for mortgages taken on or after April 30, 2009.
Earlier this week, the Building Society’s monthly survey showed house prices jumped 11.2% on an annual basis in January.
He said it was the best start to the year since 2005 and took the average house price across the UK to £255,556.
On a monthly basis, the lender’s report shows home prices rose 0.8% last month.