BARCLAYS, Halifax and HSBC are increasing their mortgage rates by up to 0.20% from tomorrow as brokers warn “as long as war rages, mortgage rates will be turbulent”.
Barclays is increasing its mortgage rates from tomorrow by up to 0.20% across its residential and remortgage ranges. Its Existing Mortgage Customer (EMC) Reward two-year fixed, £1,999 fee, 70% Loan to Value (LTV) will rise from 4.76% to 4.96%.
Halifax is also increasing its mortgage rates by up to 0.20% with homemover and first-time buyer rate increases of up to 0.20% on all two, three and five-year fixed rates.
HSBC said it is making a number of increases across its residential and Buy to Let (BTL) mortgage rates from tomorrow too – though it has not yet specified by how much.
Experts said that rising rates are due to the price of oil heading up again on a steep incline. It had reached lows of $72 in early July but it has risen to $90 today. Though this is still way below its height of $118 at the end of April.
This is due to the war in Iran re-igniting in the last couple of weeks – the US has carried out its ninth successive night of strikes on Iran.
The market is pricing in fears of inflation heading up again in the UK due to higher petrol prices at the pumps.
Mortgage pricing can change quickly
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said those waiting to lock into a mortgage need to do so now.
He added: “Lenders don’t set mortgage rates in isolation. They’re heavily influenced by swap rates, which reflect expectations for future interest rates and the wider economy. Recent uncertainty has pushed those funding costs higher, and we’re now seeing some lenders pass that on through mortgage pricing.
“That doesn’t necessarily mean we’re returning to the rapid rate rises borrowers experienced a couple of years ago. The mortgage market remains highly competitive, so while rates could edge higher in the short term if funding costs stay elevated, lenders will still be competing hard for business.
“For borrowers, it’s a reminder that mortgage pricing can change quickly. Waiting in the hope of securing a slightly lower rate can sometimes have the opposite effect if market conditions move against you.”
Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Eatenton Finance, said mortgage rates remain turbulent.
She added: “The mortgage price war ended just as quickly as the ceasefire. Those borrowers who were waiting for rates to get lower gambled and many will have lost. Now time is of the essence to get your ducks in a row and secure the lowest rates and products available.
“What’s happening to mortgage pricing once again highlights the importance of locking into a rate rather than relying on them to continue falling. Because that’s just not guaranteed.”
Turbulent
Ben Perks, Managing Director at Orchard Financial Advisers, said war equals higher mortgage rates.
He added: “There were signs this would happen last week. Swap rates have been creeping up, this is a result of instability globally and nationally.
“As long as war rages, mortgage rates will be turbulent. It also doesn’t help that we are changing PMs like football managers lately.”
Aaron Strutt, Product and Communications Director at Trinity Financial, said rates are heading in one direction: up.
He added: “TSB, Barclays and HSBC were the biggest lenders to announce rate hikes so far today. But the Halifax change probably means that Lloyds will be pushing up its cheap fixes as well which undercut virtually all of the other lenders by quite some margin.
“Halifax has a decent 4.33% two-year fix and a 4.37% five-year fix available until close of business today. We are starting to see most of the lenders raising their fixes and Halifax is even making its trackers more expensive.
“We can probably expect a few more rate changes over the next few days, so it is unlikely to be worth holding off booking a rate if you are buying somewhere or remortgaging. The continuation of the war in Iran is not good news for many reasons, and it certainly does not help bring any calm to the money markets.”
Escalating tensions
Emma Jones, Managing Director at Whenthebanksaysno.co.uk, said the price of oil is to blame for higher rates.
She added: “Amid escalating tensions in the Middle East, the price of oil is rising and that is now feeding through into higher mortgage rates.
“Markets and lenders are increasingly nervous about inflation and the base rate and that does not bode well for borrowers. Once again, we’re seeing how sensitive the UK mortgage market is to developments overseas.”
David Stirling, Independent Financial Adviser at Mint Wealth, said BM Solutions has also raised rates.
He added: “Four of the biggest mortgage lenders raising rates on the same day is the financial equivalent of going 4-0 down at half time, that is shocking, painful, and very difficult to come back from quickly. Barclays, HSBC, Halifax and BM Solutions have all moved simultaneously as swap rates climb on the back of rising oil prices and Middle East instability.
“The rate-cutting run of recent weeks is over, for now at least, and the market has turned. The borrowers who acted when rates were falling have the bragging rights. Those still waiting for the perfect deal are watching the scoreboard move in the wrong direction. If your mortgage fix is ending soon, the team talk is simple: get off the bench and get advice now, before the final whistle sounds on the rates that were available last week.”
Uncomfortable
Justin Moy, Managing Director at EHF Mortgages, said there’s too much uncertainty in the Middle East and in UK politics right now.
He added: “This is the overhang from last week’s rate increases, with the last batch of high-street lenders getting in line with the likes of NatWest and Nationwide.
“Swap rates continue to wobble around. The Middle East conflict hasn’t gone away, and the new Prime Minister appointment will have a natural effect on the money markets, as we have seen change can happen quickly and not always for the better.”
