Customers of Barclays, Santander, TSB, Skipton and the Nottingham Building Society are facing extra costs after the lenders announced mortgage rate hikes on Monday morning. The increases differed from lender to lender, but many were in the range of 0.15%, according to Newspage.
The moves follow predictions from mortgage brokers last week that Brits were "days away from wholesale increases" in mortgage rates, as UK borrowing costs reached their highest level since the 2008 Global Financial Crisis.
Brokers warn of "painful reality check"
Brokers warned that "if you've been holding out for cheaper rates, waiting has now cost you money" and urged people to "act now to secure current rates before further hikes filter through". One described the rises as "a painful reality check for borrowers", adding that "for everyday households the window of cheap borrowing is slamming shut".
Justin Moy, managing director at Chelmsford-based EHF Mortgages, said: "Significant changes on Monday morning from many of the mainstream lenders, adding to changes announced by others last week. Mortgage borrowers still have a few hours to bag a new deal if their mortgage is due for a renewal shortly and first-time buyers and home movers will need to budget for these rate hikes."
He added: "Higher mortgage rates will always slow the property market, especially when certain sectors and locations in the UK are already struggling. The government needs to react quickly to boost the housing sector and the overall economy before this spirals out of control."
Market pressures behind the hikes
Darryl Dhoffer, founder of Bedford-based The Mortgage Geezer, attributed the rises to "escalating conflict in the Middle East" which "has spiked energy prices and supply risks, reigniting inflation fears and prompting money markets to bet on central bank rates staying higher for longer".
He added: "As swap rates rise, banks must quickly lift deal pricing to protect their margins. For borrowers, waiting could prove expensive. Anyone with deals expiring within six months should act now to secure current rates before further hikes filter through."
Stephen Perkins, managing director of Norwich-based Yellow Brick Mortgages, said "with several mainstream lenders now increasing rates in quick succession, this is clearly no longer about one or two isolated repricings". He continued: "The direction of travel across the market has shifted. For borrowers, the important point is that mortgage pricing can change faster than Bank Rate because lenders respond to wholesale funding costs and market expectations. If that pressure persists, the range of more competitive fixed deals could continue to narrow, even without any change from the Bank of England."
Advice for borrowers
Matt Coulson, founder of Rickmansworth-based Heron Financial, said: "This is the mainstream lenders catching up. Last week it was mainly specialist lenders and the odd big name repricing. Now five high-street names have moved in a matter of days and when they shift together like this it points to the wholesale cost of funding rather than any one lender's book."
Iain Thompson, director of Evolve Finance, said: "This coordinated rate surge from high street giants like Barclays and Santander is a painful reality check for borrowers. For everyday households, the window of cheap borrowing is slamming shut. Those currently on standard variable rates or sitting on tracker deals will feel the squeeze immediately, while anyone with a fixed-rate product expiring in the next six months faces a significant payment shock when they are forced to refinance."
Rohit Kohli, director at Romsey-based The Mortgage Stop, added: "If you've been holding out for cheaper rates, waiting has now cost you money. This is just another climb on the rates rollercoaster we've been on all year. Markets are spooked by the scale of government borrowing and there's no clarity yet on how the Budget plans to deal with it. That's pushed bond and gilt yields higher over the past week or so, and lenders were always going to react."
Tony Sanchez, founder of Bridging Loan Directory, said: "Several lenders repricing at around the same time matters more than any single rate increase. Borrowers approaching the end of a fixed deal should review their options early, because a product available today may disappear before they are ready to apply."
