NATIONWIDE and Virgin have both increased their mortgage rates by up to 0.35% in a “brutal blow for borrowers” with “a swathe of hikes” now expected.
From tomorrow, Thursday 16 July, Nationwide has announced it is increasing selected fixed and tracker rates by up to 0.35%.
This includes rates across its first-time buyer, home mover, existing customers moving home and remortgage products.
While, on the same day, Virgin is increasing selected purchase and remortgage rates by up to 0.35%.
Barclays is also raising rates by up to 0.37% on a selection of products across its residential and reward range, it was announced earlier today.
This comes as oil prices, gilt yields and swap rates, which are used to price fixed rate mortgages, have risen on the back of growing tensions in the Middle East.
At the time of writing, Brent Crude Oil is at $85-a-barrel. This is up from a low of $71 just two weeks ago, but below the high of $114 in early May.
Prices have risen in response to Iran and US returning to all-out war in the region. US President Donald Trump has threatened to strike Iran’s bridges and power plants next week if the country does not return to talks.
Global events can push rates higher
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said borrowers may want to consider securing a rate now before they potentially rise further.
She added: “Rate rises like this can understandably make borrowers panic, but every lender reacts differently to market conditions, and while some are increasing rates, others are still competing hard for business.
“If your mortgage deal is due to end within the next six months, don’t wait and hope rates fall again. Speak to a broker, secure a deal now and keep reviewing it. You can often switch to a cheaper product later if rates improve, but you can’t go back in time if they continue to rise.”
Jamie Elvin, Director at London-based Strive Mortgages, said rates can change on just one global event.
He added: “Nationwide’s rate increase is a timely reminder that mortgage pricing is driven by far more than Bank of England decisions. Global events can push swap rates higher almost overnight, and lenders often react within days.
“For borrowers, the lesson isn’t to panic – it’s to avoid trying to second-guess the market. If you’ve found a competitive deal that suits your circumstances, securing it now is often the smarter move than waiting for a rate that may never materialise.
“The good news is that many lenders allow borrowers to switch to a cheaper product before completion if rates improve, meaning you can often protect yourself against rises without losing out if the market moves the other way.”
Justin Moy, Managing Director at EHF Mortgages, said the market is delicate right now.
He added: “Significant rate increases from Nationwide just show how delicately our economy and monetary system are linked to world events outside of our control.
“Rates can be reserved with Nationwide before application, which is always useful in these circumstances, but the need to collate documents and make quick, but qualified, decisions on mortgages is important to secure cheaper rates.”
Omer Mehmet, Managing Director at Welling-based Trinity Finance, said you should lock in a mortgage deal now.
He added: “Nationwide, Virgin Money and Barclays all increasing rates on the same day shows just how quickly mortgage pricing can change when financial markets become unsettled. Borrowers often focus on the Bank of England, but lenders price fixed mortgages using swap rates, and those have risen sharply as markets react to escalating tensions in the Middle East.
“If you’re in the process of buying a home or remortgaging, this is a reminder not to assume today’s deals will still be available in a few days’ time. While nobody should rush into the wrong mortgage, securing a suitable rate sooner rather than later can provide valuable peace of mind in a market that’s moving rapidly.”
Rates can change quickly
Andrew Montlake, CEO at London-based Coreco, also urged borrowers to lock in: “The situation in the Middle East is putting markets on edge and only yesterday we were warning borrowers could soon feel it in the form of higher mortgage rates. Today higher mortgage rates are here, and they are coming from multiple lenders.
“My advice to anyone considering a mortgage or remortgaging is lock in quickly, as the rates that remain available may not be around for long.”
Evren Ergin, Founder And Developer at ValuQ, said you can’t plan for the right moment to get a mortgage.
He added: “The useful thing here is what it proves. The same lenders who were cutting in a ‘rate war’ days ago are putting rates up this week, and the base rate has not moved. This is swap markets reacting to a conflict, not the Bank of England, and nobody can forecast the next flare-up in the Middle East.
“So if you were waiting to time the bottom, this is your answer: you cannot. The number you are trying to catch moves on missiles, not on your mortgage plan. The calm read is the same as last week.
“Do not build your decision around a rate that swings 0.35% on geopolitics. Borrow within what you can comfortably afford, take the best deal in front of you now, and refinance when the cycle turns. A fix is a decision you can revisit later. The price you pay for the house is not.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, urged people to not panic.
He added: “Nationwide’s move is a reminder that mortgage pricing can change far more quickly than most borrowers realise. Global events don’t just affect oil prices or financial markets – they can feed through into mortgage rates within days.
“The important thing is not to panic, but equally not to assume today’s mortgage deal will still be available tomorrow. If you’ve found a mortgage that’s right for your circumstances, there’s likely little to gain from delaying in the hope of rates reducing while funding costs remain elevated.
“Many lenders will also allow borrowers to switch to a cheaper product before completion if rates improve, so securing a rate today doesn’t always mean missing out tomorrow.”
Brutal blow for borrowers
Michelle Lawson, Director at Lawson Financial, said many more hikes are expected.
She added: “The Middle East melee continues and borrowers are being financially impacted again just as things started to settle. A swathe of hikes can be expected as markets react to the volatility and new instability again.”
Samuel Mather-Holgate, Managing Director & IFA at Mather and Murray Financial, said it’s a sad day for borrowers.
He added: “This is a brutal blow for borrowers. When Britain’s biggest building society starts hiking fixed and tracker rates by up to 0.35%, it sends a chill through the whole mortgage market. The cause may be thousands of miles away, but the pain lands straight on UK kitchen tables.
“Fresh conflict in the Middle East has rattled markets, pushed up swap rates and forced lenders to reprice fast. For anyone buying, remortgaging or already stretched, this is the last thing they needed. It is a grim reminder that one geopolitical shock can wipe out weeks of cautious optimism in a single morning. Borrowers should move quickly: in this market, a rate on screen today can be gone by tomorrow.”
