Barclays has announced rate increases averaging 0.2% across its fixed mortgage range starting today, with similar increases launched by HSBC. The move comes after NatWest’s latest decision to cut rates, with up to 0.23% off selected fixed deals from June 11.
Mortgage brokers warn that the influx of deals with interest rates below 4% may be “slipping away” as market uncertainty increases. Harry Goodliffe, director at HTG Mortgages, said: “We’re definitely seeing the sub-4% deals slip away, and fast. Barclays and HSBC hiking rates feels like a mix of reacting to rising funding costs and not wanting to be overwhelmed with demand. No lender wants to be too competitive in a market this uncertain.” He noted that NatWest dropping rates “was a bit of a curveball”, but that he doesn’t expect it to set a trend. Mr Goodliffe added: “The overall direction still feels upward. If you’re waiting for things to get cheaper, you might be waiting a while.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, described the current lending landscape as a “minefield.”
Meanwhile, Elliott Culley, director at Switch Mortgage Finance, noted the reason behind the mixed reactions from lenders likely being company targets.
Mr Culley said: “Swap rates have been fairly steady in the past couple of weeks, and this is reflected in the mixed reactions we are currently seeing from lenders. Lenders have targets, and it’s likely NatWest are reducing its rates to help it meet them. Meanwhile, we are seeing HSBC and Barclays increase rates as they have been pricing closer to the top in recent weeks, and it’s likely they want to reduce their business levels for the time being.”
Jack Tutton, director at SJ Mortgages, pointed out the unfortunate fact that these rate rises come at a time when hundreds of thousands of homeowners are coming to the end of their cheaper fixed rate deals.
Research by Compare the Market showed that as many as 469,192 homeowners with five-year mortgages paying an average interest rate of 2.11% will be coming off their deals this year.
Mr Tutton said: “The mortgage market roller-coaster continues, making it very difficult for consumers to decide what to do. This comes at a time when so many people’s mortgage deals are ending before the end of the year.
“Barclays have held its rates a lot longer than others, so their increases come as no real surprise; however, NatWest’s decreases are interesting as it comes off the back of them making several increases recently. Lenders are having to strike a balance between their workloads, competitiveness and the cost of funding, which is making it very difficult for consumers to decide on the best way forward.”
