Nationwide raises mortgage rates with other lenders set to follow

Nationwide raises mortgage rates with other lenders set to follow


Fears from brokers that the mortgage market is getting ahead of itself have been confirmed, as Nationwide, the country’s largest building society and third biggest lender, announced that from Friday it will hike interest rates on all its fixed-rate mortgage deals.

Despite the Bank of England predicting that the base rate will remain at 0.5 per cent for “quite some time” in order to give the housing market breathing space, it is now expected that other lenders will be forced to follow Nationwide and hike up mortgage rates.

Nationwide will increase its popular five-year fixes by up to 0.86 percentage points – adding £6,450 to the cost of a £150,000 loan – its two-year fixed deals will rise by 0.61 per cent and its three-year fixes by 0.26 per cent.

Brokers are now being urged to lock their clients into a deal as soon as possible, as in recent days the cost of wholesale borrowing on moneymarkets has soared. The two-year swap rate – which dictates the cost of fixed-rate mortgage lending – went from 1.97 per cent at the beginning of this month to 2.44 per cent just a week later, on June 8.

Ray Boulger of broker John Charcol has said: “The size of these increases suggests that Nationwide wants to reduce the amount it is lending and that will put pressure on other lenders.”

Broker at First Active Finance, Jonathan Cornell, added: “It may seem perverse to home buyers, considering the Bank of England has kept rates at an all-time low, but banks can do what they want.”

In the last week Yorkshire,

West Bromwich

and Chelsea building societies have all decided to increase rates on longer-term deals.


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