Nationwide and Virgin Money customers face higher costs this week as both lenders raise selected mortgage rates, following a similar move by Barclays on Monday. Nationwide will increase chosen fixed and tracker rates by up to 0.21%, while Virgin Money will raise some fixed rates by as much as 0.20%.
Brokers warn that sub-5% mortgages are becoming increasingly scarce and further increases could follow while swap rates and lenders' funding costs remain elevated. Barclays earlier this week raised its market-leading 4.75% two-year fixed mortgage to 5.05% and its 4.93% five-year fix to 5.03%.
Brokers warn of further rises
Justin Moy, managing director of Chelmsford-based EHF Mortgages, said there were few sub-5% mortgages remaining. He added: "I don't think this surprises anyone at the moment. Virgin Money and Nationwide themselves are increasing rates as swap rates and the economic climate show no sign of improvement in the short, or long, term."
Moy said the lack of sub-5% fixed rates has a "huge knock-on effect" for buyers and those looking to remortgage, adding: "The government can create all the small deposit schemes it likes, but if rates are high, buyers will shy away, and the market stalls."
Swap rates driving increases
James Blackler, managing director of Oakstead Finance, said the reason Nationwide and Virgin had repriced was that "swap rates dictate mortgage pricing, and they're moving the wrong way for borrowers". He advised borrowers to line up remortgages around six months before their existing deal ends, warning that "this latest 0.21% rise across remortgage and switcher ranges won't be the last of the year".
Adam Stiles, managing director of London-based Helix Financial Partners, said swap rates were driving the increases. He added: "Continued rate rises are currently the norm. No lender wants to be top of the list as this hugely impacts their service levels. So we can expect the mortgage merry-go-round of rate rises until swaps, which dictate the pricing of fixed rates, calm down and reduce in volatility."
More rises expected
Tracey Dixon, buy-to-let mortgage specialist and owner of Cardiff-based Pure Mortgage and Protection, said borrowers should expect more rises. She added: "I wouldn't assume this week's increases are the last. Lenders are repricing as their funding costs rise, but rates can change quickly in either direction."
Elliott Benson, owner of Leeds-based Sett Mortgages, said mortgage rates change quickly, noting lenders have been "sporadically increasing over the last week and it doesn't seem to be slowing down". David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, described the market as a "rollercoaster", adding that "the mortgage rollercoaster isn't quite ready to stop".
Michelle Lawson, director of Fareham-based Lawson Financial, said "the borrower onslaught is relentless with this latest round of rate increases", adding: "People's pockets are only extendable to a point and this isn't healthy."
