The rate euphoria of 2024 was short-lived with a range of lenders announcing rises as competition for the lowest rates slows.
A number of lenders have upped their rates, including Coventry Building Society and Santander, which saw increases earlier in the week, and HSBC and NatWest, which increased rates today (February 23).
Katy Eatenton, mortgage & protection apecialist at Lifetime Wealth Management said this showed “volatility” within the mortgage market and stated that, as a result, advice is “critical”.
“Hopefully rates will start coming down again in the second quarter, but it is still advisable to secure the best rates possible today,” she added.
Similarly, Richard Jennings Mortgage Services founder and managing director, Richard Jennings, said the early optimism for 2024 “appears to be dwindling”.
He expected rates to continue to be volatile until at least the next Monetary Policy Committee meeting and the Spring Budget.
“The pressure continues to mount on the Bank of England and government to curb inflation and ease the pressure on households and businesses alike,” he said.
Explaining this increase, The Mortgage Expert adviser, Darryl Dhoffer, said: “Five-year Swap rates are up 0.3 per cent and 2-year Swap rates are up 0.42 per cent on this time last year, so lenders are being cautious and having to reprice products.
“As a result, over the past week we have definitely seen a reduction in enquiries compared to the first three weeks in January.”
NatWest and HSBC
HSBC said there would be increases across its residential remortgage, residential first time buyer, existing residential customer switching, and existing residential customer borrowing more mortgage product ranges.
Magni Finance director, Ashley Thomas said the increases from HSBC was “yet another hammer blow to Britain's beleaguered property market”.
Additionally, Model Financial Solutions director, Hannah Bashford described HSBC's announcement as “no surprise” but did acknowledge that it was “another disappointment for borrowers”.
Meanwhile, EHF Mortgages managing director, Justin Moy, stated that NatWest may be following the rest of the mainstream lenders by raising its mortgage rates.
However, he warned that the collective reaction from lenders to higher swap rates will “inevitably kill off all those improvements everyone worked hard for in January this year“.
Rate reductions
But not all lenders increased their mortgage rates in the past week, as Halifax announced it would be reducing rates on selected fixed rate products across its homebuyer and remortgage products.
The Mortgage Stop director, Rohit Kohli, said that, in a week of relentless rate hikes from major lenders, it’s “refreshing” to see a larger lender taking “a more pragmatic approach”.
Meanwhile, Switch Mortgage Finance director, Elliott Culley, said Halifax’s decision “sticks out like a sore thumb”, adding that it was a “welcome piece of news at a time of real precariousness for borrowers”.
Additionally, Trinity Financial product and communications director, Aaron Strutt, said: “All of these changes highlight how important it is for borrowers to secure a rate when they can.
“Many people have been holding off taking a new mortgage deal because they expected to get better. This may well happen but it might not be for a while.”
Strutt added it was “likely” that the other big providers will make changes over the coming days given the increase in the cost of borrowing.
“Halifax is bucking the trend by lowering its rates as its competitors are putting them up,” he added.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
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