Nationwide, Santander and NatWest up mortgage rates in latest blow to homeowners

Nationwide, NatWest and Santander are the latest mortgage lenders to up their rates after a slew of increases last week.

NatWest is increasing rates from Tuesday, with mortgages for buyers rising by between 0.18 and 0.21 percentage points. Rates for remortgage customers are going up by between 0.21 and 0.22 percentage points.

NatWest’s increase is the second in a week, after it upped rates on some products last week.

Meanwhile, Nationwide said rates on its fixed products would go up to 0.25 per cent, while Santander said rates for new customers and those doing product transfers could increase by 0.2 percentage points.

In the past seven days Halifax, HSBC, Barclays and TSB have also increased rates on some of their products.

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Initially, experts said the rate increases had come because of hikes in swap rates – the interest banks charge to lend to one another.

Swap rates are based on long-term predictions for where the Bank of England interest rate – the interest the Bank charges on its lending to commercial banks – will go in the future.

Until recently, most traders had predicted the Bank of England base rate would go down from its 16-year high of 5.25 per cent in June, but some have now pushed back predictions to August, after figures showed inflation was now falling more slowly than expected.

The average two-year fixed rate is 5.87 per cent while a five-year fix is 5.44 per cent.

Rates were lower than this at the start of 2024. On 22 January, the average two-year rate was 5.59 per cent and the average five-year fixed mortgage rate was 5.22 per cent.

On 22 January, the average two-year fixed mortgage rate was 5.59 per cent and the average five-year fixed mortgage rate was 5.22 per cent.

Brokers are now warning homeowners that the increases could put pressure on other major banks to up rates, and said that those who are mulling over locking in a new deal may need to act quickly.

Nick Mendes, of John Charcol brokers, warned that NatWest’s increase was an “inevitable move” given its rates were among the cheapest on the market and competitors had repriced.

“Given the nature of the market, those who may be hesitant to commit to a deal should continue to reach out to a broker and discuss options.”

He added: “While we anticipate a reduction in fixed rates, the timeline for this adjustment may be somewhat longer than initially expected. It is important to note that, even if you secure a deal, there is still flexibility to make changes close to completion should a more favourable offer become available.”

Under a mortgage charter introduced last year, customers can lock in a new mortgage rate with most lenders six months before their term ends.

If a better deal comes available, they can then move to this instead.

Mortgage rates are currently far higher than they were in January, when expectations were that the Bank could drop interest rates in May or perhaps even earlier.

Although interest rates are still predicted to fall at some point this year, this is now unlikely to happen until later in summer, or perhaps even later.

Shock geopolitical events that pose a risk to inflation could also push a potential rate cut back further, which would be likely to have an impact on mortgage rates.