More lenders move prices higher as markets respond to renewed volatility in swap rates
A growing list of lenders is lifting mortgage rates or withdrawing fixed products as sharp moves in swaps and gilts feed through to funding costs.
Barclays, NatWest, Leeds Building Society, Accord, Gen H, Fleet Mortgages, Paragon Bank and Keystone have all announced changes to pricing or product availability, with more adjustments expected in the days ahead.
Barclays is increasing rates across a range of residential purchase and remortgage products from tomorrow, March 10.
NatWest has confirmed a series of price increases, also taking effect from tomorrow, across its existing customer and additional borrowing ranges. The bank, which already announced rate hikes last week, is also cutting the rate on a 90% loan-to-value buy-to-let option for existing borrowers and bringing in a new 75% LTV additional borrowing buy-to-let product.
Fleet Mortgages is pulling all fixed rate products, including product transfer options, at 5pm today, citing continued market volatility. The lender’s tracker range remains unchanged.
Paragon Bank has separately warned brokers that some products, including five-year fixes, may be withdrawn, and has told advisers that applications must be fully submitted by 5pm to lock in current deals.
Gen H is making another rate increase, with some rates rising by up to 20 basis points from 5:30pm today.
Alongside these moves, Leeds Building Society raised rates over the weekend and in the previous week, while Keystone has also repriced on the back of higher swap rates.
The wave of repricing follows renewed volatility in two- and five-year swap rates, which underpin the cost of fixed rate mortgage funding. Recent moves reflect a reassessment of the likely path of Bank of England base rate, driven in part by higher energy prices and geopolitical tensions.
“Mortgage rates had been gradually edging down over the past few weeks as markets priced in a series of Bank of England rate cuts later this year,” said Nicholas Mendes, mortgage technical manager at London broker John Charcol.
“The escalation in tensions involving Iran has shifted that tone quite quickly, as financial markets tend to react rapidly when geopolitical risk feeds into inflation expectations.
“We’ve seen a sharp move in gilt yields, with the two-year currently around 21 basis points higher at roughly 4.08% and the five-year up about 16 basis points to around 4.27%. Those moves matter because they underpin the funding costs lenders use when pricing fixed-rate mortgages.”
Mended added that “we’re likely to see another wave of lenders withdrawing or repricing deals over the coming days, including some who only increased rates last week.”
“Looking ahead to the next week or so, much will depend on whether markets settle or if volatility continues,” he concluded.
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