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Victoria warns of rate rises on the high street

High street lenders will waste no time in passing on the Bank of Englands base rate increase to borrowers, warns Victoria Mortgages.

The lender says the rises will come despite mortgages being largely funded by stable customer deposits.

It believes the rise will materialise even though sub-prime lenders, which rely on the wholesale securitisation and swap markets to fund their loans, have been slower to pass on the increase in funding costs to borrowers.

And as sub-prime lenders use up their hedges to protect slim margins, Victoria says they will have no choice but to pass on their increased funding costs by raising mortgages rates.

Simon Read, head of business development at Victoria, says:We are already beginning to see evidence of an increase in rates as several lenders have announced they will shortly be withdrawing their product ranges which is the first step lenders take before any repricing.

“Our advice to intermediaries is to ensure that any client thinking of refinancing soon should look to make more immediate plans before the existing low rates are gone.

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