Mortgage borrowers seeking new deals are facing unwelcome news as several lenders have raised their fixed rates. Moneyfacts, a financial information website, reported adjustments in fixed deal pricing by various lenders, such as First Direct, Coventry Building Society, Yorkshire Building Society, and Nottingham Building Society. Cumberland Building Society is also reevaluating its mortgage prices and temporarily withdrawing products, as per Moneyfacts.
These rate hikes come after recent increases by HSBC UK, NatWest, and Nationwide Building Society. According to Moneyfacts data, the average two-year fixed homeowner mortgage rate rose to 4.87% on Monday from 4.84% on Friday. Similarly, the average five-year fixed homeowner mortgage rate increased to 4.98% from 4.96% on Friday.
The surge in rates is attributed to the escalation of conflict in Iran, which has raised inflation fears and disrupted energy markets, leading to higher prices. This shift in market sentiment has impacted swap markets used by lenders to fund fixed-rate mortgages, resulting in adjustments to mortgage pricing.
Adam French, Moneyfacts’ head of consumer finance, mentioned that the expected base rate cut in March was overshadowed by geopolitical tensions, prompting lenders to adjust rates swiftly in response to changing funding costs. Some major lenders like HSBC, Nationwide Building Society, Virgin Money, and Gen H have already raised fixed-rate deals.
Nicholas Mendes, mortgage technical manager at John Charcol, explained that the geopolitical risks have caused lenders to reassess their deals, anticipating further withdrawals or repricing. Market volatility may continue to influence mortgage rates, with expectations of Bank of England rate cuts shifting, potentially affecting homeowners seeking remortgage options.
Securing a rate early could offer protection in uncertain market conditions, as rapid changes in pricing may occur. The evolving economic landscape, impacted by inflation and borrowing costs, could also affect property price growth, potentially providing opportunities for buyers to negotiate better deals.