NATWEST has pushed mortgage rates up 0.2% despite inflation going down as brokers fear “more lenders will follow” amid market uncertainty.
Data this morning showed inflation was down to 2.8% in the year to April from 3.3% in the year to March – but despite this, mortgage rates are still going up.
NatWest is the first High Street lender to increase rates across its full range, given the ongoing conflict in Iran, and the added Government leadership process, which is bringing further uncertainty to the markets.
From Thursday May 21, the lender is increasing a blanket 0.2% across purchase, remortgage and buy-to-let (BTL) rates.
Suffolk Building Society has also withdrawn all fixed rates and is not replacing them “for now” as lenders struggle to secure funds at reasonable rates.
Brokers said this move was “no shock” due to conflict in the Middle East and a Labour leadership battle causing uncertainty in the markets.
Inevitable news from NatWest
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the move was “inevitable”.
He added: “Inevitable news from NatWest this morning: the cost of borrowing has increased over the last week or so, not only due to the conflict but also to government unrest, which just spooks the markets even more.
“Uncertainty just drives rates higher and costs borrowers more in the long term. A blanket 0.2% increase across purchase, remortgage and BTL rates is more than enough to make a difference, and just shows that inflation is not the only factor in mortgage pricing.”
Martin Rayner, mortgage broker and financial adviser at Compton Financial Services, urged borrowers to lock down a rate.
He added: “The mortgage market lags wholesale swap rates, so NatWest increasing rates and Suffolk BS axing its fixed rates is no shock. More lenders will follow as funding costs bite hard. Trackers and discounts look cheaper right now and their rate may be appealing.
“But remember: a fixed rate is the market’s best guess at the average cost over the term. Rising rates make trackers tempting today, yet they’ll climb fast tomorrow. Theory says a two-year tracker should cost the same as a two-year fix. The reality is that only one gives you certainty.
“Unless you’ve got a specific plan or a killer deal, stick with fixed for proper peace of mind in choppy markets. Borrowers, don’t chase the cheapest headline if it leaves you exposed to hikes. Stability might even be better for your health – no stressing over every Bank of England decision for the next two years.”
NatWest increasing rates is no shock
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said swap rates are still high.
He added: “NatWest becoming the first High Street lender to increase rates across its full range is a significant market signal. With geopolitical tensions and domestic political uncertainty both bearing down on swap rates, this move was perhaps inevitable but the speed at which other lenders follow will be the real story.
“Borrowers and brokers alike should act now rather than wait as the window for competitive rates has a habit of closing faster than a politician changes their allegiances.”
Ken James, Director at London-based Contractor Mortgage Services, said he expects more lenders to raise their rates.
He added: “The UK needs to rein in the growing urge to celebrate early over potential rate cuts. A wave of finfluencers chasing clicks has created a narrative that simply doesn’t match the data, and too many people are ‘looking only at the dashboard, not out the window’ they will all start to get a reality check as NatWest opts to increase rates across its entire mortgage range, a move that will catch many off guard.
“For anyone watching the wider picture, the shift is far from surprising. Two destabilising forces are reshaping market sentiment: the ongoing Middle East conflict, which shows no sign of easing and the power struggle at No. 10, adding another layer of uncertainty to gilt markets and investor confidence. Together, these pressures are creating tension across the board, I expect more lenders to follow.”
Get advice and move quickly
Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice, said going onto a tracker is risky.
He added: “Predictable, but no less painful. NatWest moving first across its full range is the signal us brokers were braced for, and Suffolk BS pulling its fixed rates only sharpens the nerves. Funding costs are biting hard, and where one High Street lender goes, others tend to follow within days.
“A 0.2% rise across purchase, remortgage and BTL adds up over a two-year term. Trackers look cheaper today, but they can climb fast tomorrow. A fix is simply the market’s best guess at your average cost over the term, and it buys you certainty. Unless you have a specific plan, secure your rate now. If things settle, you can always switch to something lower later.”
Jamie Alexander, Mortgage Director at Romsey-based Alexander Southwell Mortgages, urged those shopping around for mortgage deals to “move quickly”.
He added: “NatWest increasing rates was only a matter of time. Geopolitical conflict plus political uncertainty at home is a toxic mix for swap rates, and borrowers end up footing the bill.
“Suffolk BS withdrawing fixed rates sounds dramatic, but we’ve seen lenders do exactly this over the last couple of months and return within days. Hopefully temporary. The message to clients is simple, the rate you see today may not be there tomorrow. Get advice and move quickly.”
