NatWest has increased rates in its core and semi-exclusive residential and buy-to-let (BTL) mortgages and remortgages.
As part of the changes on its shared equity and Help to Buy (H2B) shared equity scheme there will be a 15 basis points (bps) increase on selected two-year fixed rate purchase, and five-year fixed rate purchases a 1bp increase on 70 per cent and 75 per cent loan-to-value (LTV) deals.
On its residential offering there is an increase of between one to 15bps on selected two-year fixed rate purchases, while there is a one bp increase on 60 per cent and 95 per cent LTV deals on five-year fixed rate purchases.
In the semi-exclusive range, there is an increase of between one to five bps in selected five-year fixed rate purchases and an increase of between one to six bps in the selected five-year fixed rate mortgage – both for its residential offerings.
In BTL, there is an increase of between one to three bps on selected two-year fixed rate purchases and an increase of between six to 11bps on selected five-year fixed rate purchases.
For two-year fixed rate remortgaging there is an increase of between one to six bps and on the five-year the increase is between two to three bps.
According to a recent report from Moneyfacts the average two-year fixed rate mortgage has increased for the second month in a row, to reach the highest point seen since September 2016, as lenders anticipate a base rate rise in May.
The two-year swap rate has also risen to its highest value since August 2015, rising by 0.08 per cent to stand at 1.11 per cent today. Moneyfacts said as a result, providers have had little choice but to begin increasing rates to factor in the higher funding costs to their pricing.
The increase to the average two-year fixed rate may also have been affected by the withdrawal of products from the 60 per cent LTV sector. In fact, the total number of 60 per cent LTV products has fallen below 500 for the first time since September 2016, reaching 495 today.
Moneyfacts said: “In recent years, the 60 per cent LTV market has been booming. There have been vast numbers of products introduced, often at record lows, to attract borrowers who are looking to remortgage. However, with a base rate rise looming, providers could be withdrawing deals in anticipation of this. Alternatively, it could be as a result of finding themselves oversubscribed by borrowers, who will be looking to get a better deal before rates start to rise further.
After months of stagnation, both March and April’s increase on the average two-year fixed rate has now effectively cancelled out any rate reductions that may have occurred in the last 19 months. Speculation surrounding a base rate rise in May has also spiked, with providers perhaps starting to factor it in already.
Provider view:
A NatWest Intermediary Solutions spokesperson said: “Having reviewed our portfolio we have made some adjustments to rates to reflect the current market conditions and balance our mix of business.”
Adviser view:
Ray Boulger, senior technical manager at John Charcoal, said: “From its comments it would appear the lender is getting a disproportionate amount of business on the five-year fixes, which is where they are really competitive. Increasing the rates will still make them competitive but no longer market leading."
Fees/charges:
Not applicable
Verdict:
NatWest's plans suggest it wants to rebalance its portfolio so that it gets a balanced mix of business. But it could get increasingly difficult for lenders to remain competitive at a time when business rates are set to rise.
