HSBC, Nationwide and Coventry Building Society have announced increases to fixed mortgage rates, with brokers anticipating further rises from other lenders in the coming days. The rate adjustments follow volatility in money market swap rates, which lenders use to price fixed mortgage products.
Aaron Strutt at Trinity Financial confirmed these were the first large lenders to announce rate increases linked to recent funding cost changes. “It seems almost certain we are going to see a lot more rate changes over the coming days, so if you are on the hunt for a mortgage, it is worth locking into a new deal now,” he said.
Rate increases take effect
HSBC announced rate increases across residential and buy-to-let mortgage products from Friday, though specific pricing details were not immediately available. Nationwide increased selected fixed rates by up to 0.25 percentage points from Friday, whilst Coventry Building Society implemented increases across all fixed rates for new and existing borrowers from Monday.
The rate changes affect homebuyers and existing borrowers seeking to remortgage. Approximately 1.8 million fixed-rate mortgage deals are scheduled to end in 2026, with most borrowers requiring new home loans.
Market context
The Bank of England has reduced interest rates four times in 2025, bringing the base rate to 3.75%. This had resulted in cheaper home loans in recent months. David Hollingworth at L&C Mortgages noted: “We are now seeing the first big-name lender moves begin to feed through… Once we enter this cycle of lenders adjusting their rates, we know that it almost invariably results in others following suit.”
Adam Stiles at Helix Financial Partners said market uncertainty had translated into volatility in swap rates, with these lenders unlikely to be the last to increase rates.
Construction sector weakens
The mortgage rate increases coincide with a deterioration in the UK construction sector. An S&P Global survey showed faster reduction in overall business activity during February, attributed to weak order books, limited new project starts and wet weather. Housebuilding remained the weakest area, with the rate of decline accelerating.
Taylor Wimpey reduced its dividend payout to shareholders by nearly a fifth on Thursday after reporting a 54% drop in pre-tax profits to £146.5 million last year. Chief executive Jennie Daly said 2026 would be challenging with “probably a much lower increase in volumes” than last year.
The company started 2026 with a lower order book than in 2025, following speculation about potential property tax increases before the November budget which affected house sales in the second half of last year. Daly noted the spring selling season had started well, but affordability challenges persist, particularly for first-time buyers.
The combination of rising mortgage costs and weak construction activity presents headwinds for the UK property market, with approximately 1.8 million households facing refinancing decisions over the next year.
