SANTANDER AND HALIFAX RAISE MORTGAGE RATES AHEAD OF BOE DECISION

Santander and Halifax have increased their mortgage rates ahead of the Bank of England's interest rate decision on Thursday. Santander raised a significant portion of its fixed-rate mortgages by 0.15 percentage points, with some deals increased by 0.19 percentage points. Halifax raised rates for home movers and first-time buyers by 0.15 percentage points, whilst remortgage deals rose by 0.2 percentage points. The moves follow similar action by other lenders in recent days.

Lenders attributed the increases to concerns over inflation linked to heightened tensions between the US and Iran. Oil prices fluctuated sharply this week, with Brent Crude briefly reaching $100 per barrel after an Iran-backed militia attacked Saudi Arabian ships, before falling to around $80 as hostilities cooled. Official figures from the Office for National Statistics showed inflation dropped to 2.6 per cent in the year to June, though economists expect price growth to edge upwards as energy prices reset. The Bank of England has maintained the base rate at 3.75 per cent throughout the year amid concerns about oil and gas price pressures.

The Bank of England's monetary policy committee will announce its decision on Thursday. A Shadow Monetary Policy Committee of independent economists, compiled separately, recommended holding rates at 3.75 per cent, citing eased inflationary pressures and weak broad money growth. One committee member, Professor Jagjit Chadha, favoured a rate increase, citing the country's difficulty in keeping inflation at the two per cent target. Markets have priced in at least two interest rate hikes in the medium term, according to two-year gilt yields.