NATWEST is the latest lender to increase rates ahead of today’s Bank of England rate decision, following in the footsteps of other high street lenders such as Barclays, HSBC and Nationwide earlier in the week. Brokers said the raft of rate rises “highlights the importance of locking into rates when you can”.
From Friday, NatWest is making rate increases of up to 0.24% across its New Business, Existing Customer and Additional Borrowing (ADBO) product ranges.
The lender’s 5-year fixed rate purchase mortgage at 80% loan-to-value (LTV), with a product fee of £1495, is increasing by 0.24% from 3.91% to 4.15%; while its 5-year fixed rate purchase at 80% LTV with a product fee of £995 is increasing by the same amount, from 3.96% to 4.20%.
Meanwhile, its 2-year fixed rate purchase mortgage at 90% LTV (product fee £995) is increasing by 0.14% from 4.08% to 4.22%, while its 2-year fixed rate remortgage product at 75% LTV (product fee £995) is increasing by 0.18% from 3.86% to 4.04%.
First-time buyers will also feel the pain, as NatWest’s 5-year fixed rate purchase First Time Buyer product at 90% LTV (product fee £0, cashback £250) is increasing by 0.18% from 4.32% to 4.50%.
Across the board
Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management, said: “Rates have been rising across the board this week ahead of today’s base rate decision, which is expected to be a hold.
“What these rate increases highlight is that the direction of mortgage pricing can change very quickly and that borrowers should never assume rates will only go in one direction, because they don’t.”
However, Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said that while rates are edging up slightly, it’s not time to panic, at least for now.
He continued: “The Bank of England is widely expected to leave rates on hold today due to the slight rise in inflation and we may not get as many cuts this year as originally hoped if inflation doesn’t improve.
“Though rates have risen a little, let’s not forget the many positives out there such as improved affordability that have started to make a positive difference for buyers over the past six months.
“Improved lending criteria mean many people are now finding it a little easier to borrow comfortably and plan their next move with confidence.”
Lock in when you can
Andrew Montlake, CEO at London-based Coreco, a mortgage broker, added: “NatWest becomes the latest high street lender to raise its rates, following the likes of HSBC, Barclays and Nationwide.
“Swap rates increasing ultimately means mortgages get more expensive for borrowers but there is every chance this is a blip rather than the beginning of a longer term trend.
“When inflation does start to fall again, rates should resume their journey south. As ever, this highlights the importance of locking into rates when you can.”
Babek Ismayil, CEO at homebuying platform OneDome, said this week’s whirlwind of rate cuts shows the speed at which rates can change direction.
He continued: “Rising Swap rates have rippled their way into mortgage pricing throughout the whole of this week. Today, the Bank of England is widely expected to leave rates on hold due to stickier than expected inflation.
“This week’s raft or rate rises show how quickly mortgage pricing can turn.”
Meanwhile, Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said all eyes will be focused on the minutes of today’s interest rate decision.
He added: “NatWest follow several other major lenders in hiking their interest rates as economists consider how quickly inflation will come down and how quickly the central bank will cut interest rates as a result.
“The minutes of today’s interest rate decision will be closely scrutinised to see where rates could be headed next.”
Photo by Maksim Shutov on Unsplash
