Major banks and lenders like Halifax, NatWest, Virgin Money, and TSB have announced hikes in their fixed-rate mortgage deals. This move reflects the broader market’s response to increasing swap rates—the interest rates at which banks lend to each other—amid expectations that interest rates will remain elevated for an extended period.
Understanding The Shift
The Bank of England’s decision last week to maintain the Bank Rate at 5.25%, without hinting at any future cuts, has led to a ripple effect across the lending industry. Swap rates have ticked upwards, prompting lenders to reevaluate their mortgage offerings. This development is crucial for both new borrowers and existing homeowners looking to switch or renew their mortgage deals.
Halifax Leads The Charge
Starting from 9 February, Halifax will adjust the cost of its fixed-rate mortgages across the board. This includes loans for new purchases, product transfers for existing customers, and specialised products like green mortgages and shared ownership deals. Those considering borrowing from Halifax should prepare for increased rates, especially on larger loans.
NatWest Adjusts Rates
NatWest is also on the move, with selected two and five-year fixed rates for residential purchases and remortgages set to rise by up to 0.11 percentage points from 9 February. Notably, first-time buyers aiming for a 90% loan to value (LTV) mortgage will face rates up to 0.11 percentage points higher. The bank’s five-year fixed rate for purchase will settle at 4.59%, accompanied by a £995 fee, while the two-year equivalent will increase to 4.99%.
Virgin Money’s Strategy
Virgin Money is tweaking its range of fixed-rate deals starting 9 February, impacting various products, including a five-year purchase deal at 90% LTV which will see a 0.1 percentage point increase to 4.5%. Remortgage deals at lower LTVs will also experience slight hikes.
TSB and Accord Join The Trend
TSB is adjusting its two-year fixed-rate deals for residential remortgages and purchases, with increases noted for first-time buyers and those purchasing homes at higher LTVs. Meanwhile, Accord, part of the Yorkshire Building Society, is withdrawing and increasing rates on a selection of its mortgage products from 9 February, impacting large loans and new build purchases among others.
What This Means For You
The landscape for borrowing is changing, with fixed-rate deals becoming more expensive across a range of products and lenders. Nick Mendes, a mortgage broker at John Charcol, says, “Market Swap movement continues to increase each day and it won’t be long before those remaining sub-4% deals are no longer available. The rate war feels like it is cooling off, but hopefully this is only temporary.”