NatWest is set to increase its mortgage rates despite a bigger than expected drop in interest rates.
New data revealed inflation in Britain has dropped to 7.9 per cent in the year to June, however the bank said it will raise a number of fixed rate deals by up to 0.3 percentage points from today.
The increase will hit two-year and five-year deals for 90 per cent loan-to-value mortgages.
Its rates will also surge by up to 0.4 per cent on selected 95 per cent loan-to-value five-year deals.
The increase will hit two-year and five-year deals for 90 per cent loan-to-value mortgages
But the price hikes come as a sharp fall in interest rate is expected after a surprise drop in inflation.
The consumer price index (CPI) measure of inflation shows prices are still rising, just at a slower pace than before, as the rate fell from 8.7 per cent in the year to May.
Most economists had expected the rate of inflation to fall to 8.2 per cent in June.
June’s figures could see the Bank of England opt for a smaller increase in interest rates at its next meeting in August after June’s half a percentage point shock hike to 5 per cent, according to experts.