Nationwide Building Society, one of the UK’s largest mortgage lenders, has announced an increase in its mortgage rates for current customers. This news comes as a dampener for those clinging to the hope of an early relief from the Bank of England’s rate cuts.

From today, 19th March, Nationwide is set to adjust the costs tied to selected fixed-rate mortgages upwards by up to 0.2 percentage points. This change will affect current customers who are on the lookout for a new mortgage deal, including those nearing the end of their current fixed-rate agreements as well as those aiming to borrow more.

The Details of the Increase

For those opting for product transfer deals, also known as “Switcher” deals, or seeking additional funds through “Additional Borrowing” deals, the news is quite straightforward: higher rates kick in today, Tuesday. Specifically, new two-year fixed-rate switcher deals will commence at a rate of 4.69% for loans with a 60% loan to value (LTV) ratio, accompanied by a £999 fee. The rate for five-year fixed deals is set to start from 4.24%.

Those existing Nationwide customers looking to secure additional borrowing are facing similar rate adjustments, with two-year deals starting at 4.69% (60% LTV) and a £999 fee, and five-year deals beginning at 4.29%.

Bank of England’s Role

Meanwhile, all eyes are on the Bank of England, which is due to announce its latest decision on the Bank Rate this Thursday. Speculation is rife, with many commentators betting on the bank maintaining the rate at 5.25%, especially in light of the anticipation around the Federal Reserve’s meeting on Wednesday in the US.

The Bigger Picture

This rate hike by Nationwide isn’t just a standalone event. It’s a reflection of a broader trend that sees mortgage rates climbing, exerting added pressure on household budgets across the UK. The Financial Conduct Authority’s data reveals a concerning scenario: around 1.5 million homeowners are poised to exit their fixed-rate mortgage deals in 2024, many of whom are currently enjoying rates below 3%.

As more lenders, including Nationwide, adjust their product transfer rates to hover around the 5% mark, the impact on homeowners is undeniable. The Bank of England itself projects that approximately five million homeowners will face increased monthly mortgage payments leading up to 2026.