Following this morning’s lower than forecast fall in inflation, Coventry Building Society has introduced a rate increase across its fixed rate products.
The society will increase all residential fixed rates for both new and existing borrowers, and will also be increasing all of its buy-to-let (BTL) and portfolio BTL fixed rate offerings.
Newspage asked brokers for their thoughts on these increases, and how the rest of the mortgage market will react over the coming days. Their views are below.
Reaction:
Justin Moy, managing director at EHF Mortgages:
“This is disappointing news. Swap rate increases continue to hammer mortgage borrowers, and lenders have no choice but to pass on those higher costs.
“The 48-hour notice Coventry Building Society provides is always appreciated by brokers and borrowers, but this is just the start of another major ripple of increases that will only disappoint those coming off cheaper deals and looking to buy.”
James Bull, mortgage broker at JB Mortgages:
“It is always sad to see a lender increasing its rates and bad news for borrowers.
“Volatility in the mortgage market is showing no signs of slowing down.”
Michelle Lawson, director at Lawson Financial:
“No surprises here following this morning’s inflation decrease as it wasn’t as low as markets expected.
“More than anything we need stability but the mixed messages being sent out to borrowers remain. This appears to be the new ‘norm’ for now.”
Peter Stokes, director of mortgages at Davidson Deem:
“Over the past week or so, swap rates have been steadily increasing, partly due to inflation figures from across the Atlantic as well as increasing tensions in the Middle East.
“Inflation in the UK, though falling, fell less than expected in March, and these hikes from the Coventry suggest this is already starting to filter through to higher fixed rates from lenders.
“If your rate is coming up for renewal, it might be better to act sooner rather than later to get the very best deal.”
Amit Patel, adviser at Trinity Finance:
“Swap rates have been volatile over the past few days so lenders are monitoring their loan books to ensure they are making sufficient margins, whilst at the same time maintaining service levels by not being the cheapest lender in the market.
“I anticipate other lenders will announce modest rate increases over the coming days, perhaps to do with the lower than expected fall in inflation.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“For the past week, there has been upward pressure on lenders with increases in gilt yields and swap rates.
“Unfortunately, lenders may now have to capitulate and push up fixed rates in the coming days.
“Sadly this has started with Coventry Building Society and whilst they may be the first, they won’t be the last this week.”
Gary Bush, financial adviser at MortgageShop.com:
“Another head-wobbling moment for Coventry Building Society as it increases its fixed rates despite the fact that the UK inflation data showed it’s slowing.
“God only knows what the increases would have been if the UK had mirrored the US and seen a spike in the data.
“This is a weird strategy being demonstrated from the Midlands.”
Darryl Dhoffer, adviser at The Mortgage Expert:
“The March CPI figures showed a slight decrease. However, this isn’t leading lenders like Coventry BS to change course.
“They, along with many others, still expect interest rates to stay elevated for an extended period.
“Global events continue to fuel inflation, making the Bank of England’s 2% target as challenging as trying to hit the moon with a rubber band.
“They can see the target, but for now won’t reach it.”
Dariusz Karpowicz, director at Albion Financial Advice:
“Coventry Building Society’s rate hikes are the latest chapter in the current mortgage market saga, reflecting its volatility.
“As brokers, we’re not strangers to these frequent updates — rate changes are part of the daily grind.
“Previously, Coventry often emerged as the most affordable option in various scenarios. With these increases, that might no longer be the case.
“It’s a reminder of the interesting and unpredictable times we navigate in the mortgage industry. The rest of the market will likely follow suit or adjust strategies in response to these changes, as everyone tries to find their footing.”
The Intermediary has reached out to Coventry Building Society for comment.
