The average two-year fixed-rate residential mortgage on the market on Tuesday morning was 5.54%, up by 0.04 percentage points from 5.50% on Monday, according to Moneyfactscompare.co.uk. This is the biggest daily rise since April 2.
The typical five-year fixed residential mortgage rate increased to 5.57% on Tuesday, an increase of 0.05 percentage points from 5.52% on Monday, the biggest daily increase since March 31.
Mortgage rates had been edging down in recent weeks after jumping earlier this year amid the conflict in the Middle East. But a wave of lenders have been increasing their rates in recent days.
Expert warns of continued volatility
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said borrowers will “be deeply disappointed to see mortgage rates on the rise again, but this just shows how sensitive our financial markets are to geopolitical tensions.”
She added: “As feared, rising swap rates (which lenders use to price mortgages) are a signal for lenders to move quickly to re-price their ranges, as fixed mortgage rates tend to follow these moves.”
Springall said: “Until there is more certainty in the market, mortgage rate moves are unlikely to calm in the weeks ahead, and it will be frustrating for buyers to see that the positive trajectory of rate cuts seen over recent weeks has been thrown off course.”
Lenders repricing products
Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “At least 25 lenders have increased selected mortgage rates in the last seven days, with only a handful reducing selected products. The likes of HSBC, Barclays, Nationwide Building Society, Lloyds Banking Group and NatWest were among those making hikes.”
He said higher funding costs leave lenders “with little choice but to reprice products, even if the Bank of England hasn’t yet changed the base rate”.
French added: “A more volatile world is a more expensive world, and recent months and years are clear evidence that borrowers cannot simply assume mortgage rates will continue moving in one direction. Inflation shocks and shifts in market sentiment can alter expectations overnight. While competition between lenders is still strong, another bout of volatility has quickly brought the latest rate cutting cycle to a halt. In the meantime, it is essential prospective borrowers stay on top of their options and seek independent advice.”
