It’s been a rocky fortnight for anyone in this position
Nationwide and Virgin Money have become the latest lenders to push up their mortgage rates once more, with industry experts warning they will effectively “slap on an extra £360 a year to a mortgage of £150,000”. Nationwide is lifting mortgage rates from Friday, March 13, by as much as 0.2 per cent right across its range.
The building society had only raised rates just seven days earlier by up to 0.25 per cent. Virgin Money is also implementing increases of up to 0.21 per cent across its products from today. The bank had similarly raised rates only a week ago by up to 0.25 per cent.
Industry specialists say a 0.2 per cent increase equates to roughly “slapping on an extra £360 a year to a mortgage of £150,000”. On Thursday, NatWest revealed rises of up to 0.25 per cent across its offerings, whilst Barclays announced increases of up to 0.3 per cent across its range.
Swap rates are climbing back towards levels seen 12 months ago, owing to the conflict in the Middle East – leaving the mortgage sector in “turmoil”.
Emma Jones, managing director at Runcorn-based Whenthebanksaysno.co.uk, said: “Rates are now going up at breakneck pace and borrowers should be very conscious of this fact. Lenders large and small are upping rates across the board, often quite noticeably. Events in the Middle East are creating turmoil in the mortgage market.”
Babek Ismayil, CEO at homebuying platform OneDome, noted the mortgage landscape looked vastly different compared to early March.
He said yesterday: “This has not been a great week for borrowers at all. Markets are highly volatile and are pricing in increased inflation, which is sending swap rates north and mortgage rates with them. In under a fortnight, the entire mortgage landscape has changed.”
Dariusz Karpowicz, director at Doncaster-based Albion Financial Advice, explained that an additional 0.2 per cent adds approximately £360 annually to a £150,000 mortgage.
He said on Thursday: “Four rate rises in a single week and we are not done yet. Nationwide and Virgin Money are both hiking by up to 0.2 per cent from tomorrow, right behind NatWest and Barclays. That extra 0.2 per cent adds roughly £360 a year on a £150,000 mortgage. Not pocket change.
“Until geopolitical tensions settle, lenders will keep repricing. Swap rates are reacting to global uncertainty and lenders are passing every basis point straight to borrowers.
“If you are sitting on a deal or thinking about one, lock your rate in now. You can always switch to a lower rate later if markets calm down. Waiting, on the other hand, only costs you more.”
Adam Stiles, managing director at London-based Helix Financial Partners, anticipated further instability before conditions stabilise.
He said: “The mortgage market has been in turmoil this week with a whole raft of rate increases across the board, with very little notice. We’re expecting more to come until the markets calm down.
“Stability here is key and we won’t see rates calming down until we see this. It’s important to get a rate locked in sooner rather than later to hedge any further increases. If they drop again you can secure lower rates at that point.”
Simon Bridgland, broker at Canterbury-based Charwin Private Clients, suggested borrowers would be experiencing anxiety.
He continued: “Two lenders joined at the hip have both come out and set up their stall for the weekend, with increases sure to set off the more nervous borrower. With rates set to increase by up to 0.2 percent with both Nationwide and Virgin from tomorrow. This comes hot on the heels of NatWest and Barclays, who have both issued notices of increases from tomorrow.”
Martin Rayner, director at Compton Financial Services, outlined why increasing swap rates are being transferred to borrowers.
He continued: “Rising swap rates lead to higher mortgage rates and also signal that markets expect interest rates to stay higher for longer, which can reduce affordability for borrowers and increase borrowing costs for businesses, potentially slowing housing activity and wider economic growth. Markets are becoming less confident that interest rates will fall soon, with geopolitical tensions and inflation risks pushing expectations towards rates staying higher for longer.”
