Mortgage lenders announce widespread rate rises as funding costs jump

Mortgage rates are rising again, with an unusually large number of banks and building societies announcing increases to their fixed-rate deals.

Nationwide, Halifax, HSBC and TSB are among the lenders increasing rates, while further repricing from other major providers is likely if wholesale funding costs remain elevated.

From Tuesday 15 September, Nationwide is increasing a wide range of fixed mortgage rates by up to 0.30%.

TSB is increasing selected two and five-year residential purchase and remortgage fixes by 0.10%, while two and five-year Buy-to-Let and Portfolio Buy-to-Let rates up to 75% loan-to-value are rising by 0.25%.

Halifax Intermediaries is also increasing selected home mover and first-time buyer fixed rates, as well as all fixed-rate remortgage products. HSBC has confirmed increases across a number of its residential and Buy-to-Let mortgage rates.

Why are mortgage rates rising?

Fixed mortgage pricing is heavily influenced by swap rates, which lenders use when working out how much it will cost them to fund fixed-rate mortgages.

Swap rates have risen sharply as financial markets price in greater inflation risk, higher borrowing costs and the possibility that interest rates will remain higher for longer. Rising energy prices, geopolitical uncertainty and higher government bond yields have added to the pressure.

When funding costs increase quickly, lenders often have little choice but to reprice their mortgage ranges. This can lead to several large lenders making changes within days of each other.

Could the cheapest fixed rates move towards 4.75%?

Trinity Financial Product and Communications Director Aaron Strutt says:

“It has been a pretty grim start to the week for anyone looking for a mortgage because an unusually high number of lenders have announced they are putting up their rates due to pricing fluctuations and swap rate hikes.

“Lots of the big and small lenders are pushing up their fixes, so if you do need a mortgage it is worth trying to secure a rate as soon as you can. When NatWest, HSBC and Halifax bump up their prices, Santander, Barclays and Nationwide are generally not far behind.

“It looks like two, three and five-year fixes will be noticeably more expensive given the number and scale of rate rises. Lenders are under much more pressure to fund their mortgages because borrowing costs have increased.

“We currently have two-year fixes starting from around 4.55% for borrowers with a 40% deposit, but over the coming days the best-buy deals could move closer to 4.75% or higher.

“The mortgage market has really turned into a drawn-out waiting game for borrowers hoping fixed rates will get back closer to 4%.”

Should you secure a mortgage rate now?

Borrowers purchasing a property or remortgaging should be particularly careful about waiting for cheaper deals when wholesale funding costs are moving higher.

Mortgage rates can be withdrawn at short notice, and lenders do not all reprice at the same time. This means there can temporarily be a significant difference between the cheapest lenders and those that have already increased their rates.

Trinity Financial's brokers can compare rates across a wide range of banks, building societies and specialist lenders and check whether it makes sense to secure a deal now rather than risk paying a higher rate later.

Speak to Trinity Financial

If you are buying a property and would like to understand how much you could borrow and what your monthly mortgage payments may be, contact Trinity Financial to discuss your options with one of our mortgage brokers.

Call Trinity Financial on 020 7016 0790 to secure a mortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change. It is for general information purposes and is not advice.

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