Families are facing the “year of the squeeze” with inflation exceeding 5pc, the highest in a decade, taxes rising from April, energy costs spiralling and the costs of goods and services reaching fresh highs.
Jonathan Harris, of mortgage broker Forensic Property Finance, said the news would be “a hard pill for cash-strapped borrowers to swallow, given the rising cost of living”.
He added: “It is more important than ever that borrowers shop around for the best mortgage when buying a property or remortgaging, using a broker to compare all the deals on the market.”
Nationwide said it was upping rates by between 0.05 and 0.45 percentage points on remortgage, product transfer and additional borrowing loans, which will add hundreds to the cost of borrowing for customers.
The biggest increases will hit existing borrowers most, such as those switching to new fixed deals or those borrowing more, while first-time buyers will face less severe increases of as little as 0.05 percentage points.
Henry Jordan, of Nationwide, said it was announcing the changes now, to kick in at the start of February, “to give borrowers certainty about what their payments will be”, as well as time to consider switching to a better deal.
He added: “We regularly review our mortgage range and these latest changes to our new business and switcher rates are reflective of the current environment. With swap rates [the underlying rates which determine how banks price deals] continuing to increase, fixed rates have begun to move upwards and our new rates follow changes made across the mortgage market.”