- Barclays, HSBC, NatWest, Accord and Leeds Building Society raise their rates
- Markets now price in just two or three base rate cuts this year, compared with six
- Mortgage brokers warn more lenders will follow suit in the coming weeks
Five mortgage lenders have announced they are raising rates, in the latest blow for homebuyers and those looking to remortgage.
Barclays, HSBC, NatWest, Accord and Leeds Building Society have contacted mortgage brokers today to inform them that they will be raising rates from tomorrow.
It comes as financial markets backtrack on earlier predictions of interest rate cuts, with a “higher for longer” scenario now looking more likely.
Earlier this year, markets were predicting as many as six or seven base rate cuts in 2024. Now that number has dropped to just two or three.
On the rise: Changing expectations around the Bank of England base rate have pushed up mortgage rates
The timing of the first base rate cut has been pushed back and markets now expect the first base rate cut to come in August.
As a result, mortgage lenders have been more inclined to price up rather than down in recent months.
Fixed rate mortgage prices are reflected in Sonia’s swap rates. These They show what lenders believe the future holds regarding interest rates and this governs their prices.
Since the beginning of the year, two-year swaps have increased from 4.04 percent to 4.66, while five-year swaps have increased from 3.4 percent to 4.11 percent.
> Check the best offer for your situation with our mortgage calculator tool
Nicholas Mendes, mortgage technical manager at broker John Charcol, hopes the latest wave of rate hikes will lead more lenders to follow suit.
He says: ‘Swaps had risen at the end of last week following recent data announcements in the UK and US, with speculation of a delay in cutting bank rates until August, increasing the likelihood of two or three bank rate reductions this year.
“This latest move by HSBC leaves Nationwide and NatWest in the lead on purchase and remortgage deals, which will inevitably mean service levels will come under pressure and eventually similar moves by the remaining lenders.”
How much are mortgage rates rising?
Most mortgage lenders do not reveal the extent of rate rises in advance, so borrowers will have to wait until tomorrow to find out.
HSBC is raising rates on a host of deals aimed at new and existing customers, and this will affect first-time buyers, house-movers and those remortgaging.
NatWest is increasing rates for internal product transfers across several two- and five-year deals by 10 basis points.
Both Accord and Leeds Building Society are raising rates by between 10 and 40 basis points.
Meanwhile, Barclays says it is changing rates on a selection of products in its residential offers aimed at both home buyers and remortgaging.
Mark Harris, chief executive of mortgage broker SPF Private Clients, adds: ‘Pricing looks like it could be a tough few days.
“Before funding costs and volumes become more acceptable, lower rates will not return, so we expect other lenders to follow suit before prices improve.”
With 1.6 million homes due to remortgage over the course of this year, these changes will leave some reflecting on their next steps as their current deals approach expiry.
“While waiting for the optimal deal may seem tempting, it is advisable to consult with a broker periodically to stay informed about the options available until the deal is concluded,” adds Mendes.
“Meanwhile, anticipation is building at each Monetary Policy Committee meeting, with hopes for a rate cut to give markets some stability and respite.”
