NATWEST has increased mortgage rates by a further 0.28% as experts warn that we could see 6% rates by the end of April.
NatWest has started the week as the first major lender to announce a product-wide increase of 0.28% for all mortgage types, to be implemented on Tuesday.
This comes as swap rates have risen by around 4.15% to 4.70% since the start of the Iran war – and this has fed into rising mortgage rates.
This is due to a fear of inflation spiking over rising oil prices, Brent crude reached $115 per barrel today, leading to higher energy and fuel costs.
It’s now been over a month since the start of the war, and it shows no sign of abating.
US officials said troops are preparing for possible ground operations, though President Donald Trump said a peace deal could be reached “fairly quickly”.
Experts warned that if this war is not solved as soon as possible, then mortgage rates could keep rising relentlessly.
Disappointing but not unexpected
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said 6% mortgages are now a real possibility.
He added: “A disappointing but not unexpected start to the week, as Swap markets and lenders react to the ongoing conflict, which shows no immediate resolution. As oil and inflationary pressures mount, this 0.28% increase across the board is likely to be replicated by most major lenders this week.
“There is a real chance that rates will push closer to 6% by the end of April if we see no improvement in the Middle East over the coming weeks.”
Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said it may be an opportunity for first-time buyers to negotiate a cheaper price.
He added: “It’s starting to feel like the war in the Middle East is not going to be over quickly and lenders are now pricing in the risk of entrenched inflation due to the soaring oil price and higher interest rates.
“Trump has single-handedly turned the entire UK mortgage and property market on its head and rates could continue to deteriorate in April. This is not the start to the week borrowers had been hoping for. Equally it is an opportunity for first-time buyers to negotiate very hard as they hold all the cards right now.”
It is an opportunity for first-time buyers to negotiate
Adam Stiles, Managing Director at London-based Helix Financial Partners, said lenders are relentlessly raising rates.
He added: “NatWest increasing by a large margin is concerning as we aren’t seeing any slowing down in rate increases from lenders – they’re coming in thick and fast.
“Whilst we originally thought the large increases were to weather the volatility, the volatility is so large that these sizeable rate increases are becoming more and more regular. We need stability and we need it now.”
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said it’s going to be a tough summer.
He added: “As more uncertainty drips through from the Middle East as Trump suggests boots on the ground are the next step in the conflict, rates continue to tick up in the mortgage market.
“The expectation of higher oil prices and rising inflation means lenders are hiking rates in anticipation of the Bank of England doing so to try and curb inflation, as they did after Russia invaded Ukraine. It looks like it is going to be a tough summer for the housing market.”
Michelle Lawson, Director at Fareham-based Lawson Financial, said borrowers are in for a “bumpy ride”.
She added: “A new week and the mortgage mayhem and onslaught of rate rises continues to add to the misery here in the UK.
“The knock-on of the Middle East crisis continues and shows little signs of easing. Buckle in for a bumpy ride for the foreseeable future.”
