Major lender hikes mortgage rates from today – what it means for you


A MAJOR lender is hiking some of its mortgage rates from today.

Nationwide is increasing rates up up to 0.45 percentage points, affecting customers taking out a new mortgage deal.

Nationwide is increasing mortgage rates for new customers

For first-time buyers and those looking to move homes, rates will increase by between 0.05 percentage points and 0.40 percentage points on products up to 95% loan-to-value (LTV).

This is the amount you need to borrow on top of your deposit.

For those looking to remortgage, rates will increase by between 0.05 percentage points and 0.40 percentage points on products up to 90% LTV.

Switcher, additional borrowing and existing customer moving home rates will increase by between 0.05 percentage points and 0.45 percentage points, while shared equity rates will increase by up to 0.45 percentage points.

Santander and Halifax have also increased their rates.

While Leeds Building Society, Foundation Home Loans, MPowered and Scottish Building Society, have also said they will be increasing or withdrawing some of their products, according to the Financial Times.

Earlier this week, the Office for National Statistics (ONS) figures showed that inflation dropped to 8.7% in April.

But the fall had been expected to be far greater, with experts expecting it to drop to 8.2%.

This has pushed up gilt yields (government bonds) which influences swap rates.

Swap rates, which are used by lenders use to price mortgages, have been rising and some other lenders have also been tweaking their mortgage rates upwards.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Given that inflation has come down, the market reaction has been surprising, with swaps, which underpin the pricing of fixed-rate mortgages, rising sharply.

“The markets have reacted negatively on the back of expectations as to where inflation would be by now, versus the reality.

He added that fixed-rate mortgage pricing has already been rising, with a number of lenders already making changes or announcing plans to.

Mark said: “Santander and Halifax are just two lenders who have recently increased their rates and others are likely to follow suit, with short notice.

“The markets’ assessment of where interest rates are heading has been consistently wrong over the past nine months.

“Swaps can be extremely volatile and this is likely to be a knee-jerk reaction before they settle down.”

A Nationwide spokesperson said the recent rate rise will “ensure our mortgage rates remain sustainable”.

Moneyfacts, a financial information website, said that it had seen some mortgage product withdrawals as well as rate increases this week.

The average two-year fixed-rate mortgage on the market is 5.34% and the average five-year fix is 5.01%, according to its figures.

At the start of April, these figures were 5.35% and 5.05% respectively.

Rachel Springall, a finance expert at Moneyfacts said: “These increases by Nationwide come at a time of volatility surrounding future interest rates, and it is a move we have seen from other lenders through uncertain times as they adjust their pricing.”

While David Hollingworth, from broker L&C Mortgages, said Nationwide’s move is “significant”, as a major lender.

He said: “We’ve already seen fixed rates edging up in recent weeks.”

“Borrowers with an eye on a fix will want to move fast as rates could come and go quickly.”

How to get the best deal on your mortgage

If you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.

But there are several ways to land the best deal.

Usually the larger the deposit you have the lower the rate you can get.

If you’re remortgaging and your loan-to-value ratio has changed this could also give you access to better rates than before.

A change to your credit score or a better salary could also help you access better rates.

If you have a fixed rate, you could see higher rates when you come to the end of the current term after the BoE rate rises.

And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.

You can lock in current deals sometimes up to six months before your current deal ends.

Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.

But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.

To find the best deal use a mortgage comparison tool to see what’s available.

You can also go to a mortgage broker who can compare for you, but you may have to pay for this service.

It could cost a couple of hundred pounds but it might save you thousands on your mortgage overall.

You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.

You can use a mortgage calculator to see how much you could borrow.

Remember, that you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks, and looking at your credit file.

You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.

Do you have a money problem that needs sorting? Get in touch by emailing [email protected]