Leading UK Lenders Adjust Mortgage Rates Amid Market Uncertainty

At least five leading lenders in the UK have recently increased rates on their fixed mortgage deals, citing market uncertainty as the primary reason for the adjustments. This move has put additional pressure on homebuyers and those seeking to remortgage.

Barclays, HSBC, NatWest, Accord Mortgages, and Leeds Building Society have all raised the costs of certain fixed-rate deals, with some seeing an increase of up to 0.4 percentage points. The adjustments come in response to slight upticks in money market swap rates, which play a significant role in determining the pricing of new fixed deals.

Danny Belton, the head of lending at Mortgage Advice Bureau, highlighted that while some lenders have raised rates, there are still opportunities available for borrowers. He emphasized that there are lenders maintaining or even reducing rates, providing some stability in the market.

Market Trends and Predictions

Over the past two years, mortgage costs have experienced significant fluctuations. Following the fallout from the September 2022 mini-budget, new fixed-rate deals soared above 6%. However, at the beginning of this year, rates plummeted, only to gradually rise again.

Recent weeks have seen relative calm in the mortgage market. Nevertheless, the revelation of a smaller-than-expected drop in inflation for March has led some economists to delay their predictions for when the Bank of England might cut interest rates. Investors in the city are currently anticipating two rate cuts by the year’s end.

Insights from Industry Experts

Nicholas Mendes, a mortgage technical manager at John Charcol, noted that lenders have made strategic adjustments in response to market uncertainties. Despite these changes, Mendes reassured borrowers that they are unlikely to face the same level of volatility and high rates seen in the previous year.

Moneyfacts, a financial data provider, reported a slight increase in the average rate for new two-year fixed-rate deals, now standing at 5.83%. Similarly, the typical rate for a new five-year fix has risen to 5.4%. However, the most competitive two- and five-year fixes are currently priced at 4.46% and 4.13%, respectively.

Conclusion

In conclusion, the recent adjustments in fixed mortgage rates by leading UK lenders reflect the ongoing market uncertainty and the impact of external factors such as interest rate expectations. While borrowers may face slightly higher rates, there are still opportunities available in the market. It is essential for prospective buyers and remortgagers to stay informed and explore the diverse options offered by different lenders.