NATIONWIDE will increase selected fixed and tracker rates by up to 0.20% from tomorrow, the lender announced on Wednesday afternoon, with brokers urging borrowers to “secure a rate now and review it if the market improves”.
They also warned that the lender’s decision to hike tracker as well as fixed rates may suggest markets are bracing for a possible base rate rise.
The Nationwide rate hikes follow in the footsteps of the Halifax, which announced increases of up to 0.18% yesterday, as practising brokers said higher rates reflect increased wholesale funding costs.
The Nationwide’s rate increases apply across its First Time Buyer, Home Mover, Existing Customers Moving Home and Remortgage products — as well as its Switcher and Additional Borrowing ranges.
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said: “More woe for mortgage borrowers looking to move home or a new mortgage deal.
“Further increases are expected because of the economic outlook, with inflation set to stay higher for longer, the increased prospect of base rate increases, and the bond market at its highest level for many years.
“Government intervention is needed urgently, before inflationary pressure ruins our economy and rates have no option but to go even higher.”
Jamie Alexander, Mortgage Director at Romsey-based Alexander Southwell Mortgages, said: “When a lender the size of Nationwide moves rates up, the rest of the market pays attention.
“This is not a surprise given where swap rates and gilt yields have been heading, but it is another blow for borrowers who were hoping the worst was behind them.
“The honest message right now is do not wait. Securing a rate today and reviewing it if things improve is a far safer position than sitting on the fence hoping for something better that may not come.
“The window on today’s deal does not stay open. For anyone coming off a fixed rate in the next six months, start the conversation now.”
Andrew Montlake, CEO at London-based Coreco, agreed: “Borrowers should not panic, but anyone coming towards the end of a fixed rate would be wise to start looking early.
“In this market, hanging around hoping for tomorrow’s cheaper rate can sometimes mean watching today’s disappear.”
Rohit Kohli, Director at Romsey-based The Mortgage Stop agreed: “When a lender this size moves, it tells you where pricing is heading. Confidence was already fragile and this won’t help.”
Adam Stiles, Managing Director at London-based Helix Financial Partners, said the increase in tracker rates caught his eye ahead of next week’s Bank of England rate decision.
He added: “The Nationwide have held out as long as they can and the increase in tracker rates is rather telling on their outlook for the Monetary Policy Committee (MPC) meeting at the Bank of England on the 17th September.
“With so much market volatility in the economy, we can expect rates to remain high until things calm down.”
Jack Tutton, Director at Fareham-based SJ Mortgages, also noted the increase in tracker rates: “What’s interesting is the decision to increase tracker rates as well as fixed rates, as these have been proving popular with borrowers given the difference between them and the equivalent fixed rates.
“Whether this is being driven by the volume of new business being taken on a tracker or Nationwide forecasting a base rate increase next week, we shall see when the MPC meets next week.”
Craig Fish, Director at London-based Lodestone Mortgages, gave practical tips: “For borrowers, the message is simple, rates are more likely to drift up than down from here, so anyone with a deal expiring in the next six months should be locking something in now.
“Sitting on your hands in this market is the expensive option.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial, said the mortgage and property markets may remain subdued given the current economic backdrop.
He added: “The bigger picture is the same as it’s been all year. Borrowing is expensive enough to keep the market subdued, and that won’t change until the cost of money genuinely eases.”
Meanwhile, Tony Sanchez, Founder at Bridging Loan Directory, a specialist finance publication, said property investors should also take note of the rate hikes.
He continued: “For property investors, there can be a less obvious consequence: higher term-mortgage pricing may reduce the amount available when refinancing, potentially leaving a shortfall where that refinance is intended to repay a bridging loan.
“One lender’s repricing does not establish the direction of the whole market, but it is another reminder that borrowers should not assume the mortgage terms supporting their planned exit will remain unchanged.”
