Key facts
- Five UK lenders have raised mortgage rates.
- Barclays increased rates by up to 0.2%, with a two-year fixed rate at 5.53%.
- TSB increased rates by 0.15%.
- Swap rates, influenced by Middle East conflict and inflation expectations, are driving the mortgage rate increases.
- The average five-year fixed mortgage rate reached 5.68%, the highest since May 11.
Five lenders in the UK have increased their mortgage rates, signaling a potential shift in the market as the Bank of England considers raising interest rates. Barclays has raised rates on a range of products by nearly 0.2%, with its two-year fixed rate now at 5.53% and its five-year fixed rate at 5.48%. TSB has also increased rates on residential mortgage products by 0.15%. Santander, Skipton Building Society, and Nottingham Building Society are among the other lenders that have adjusted their pricing upwards.
The volatility in the mortgage market is attributed to the re-pricing of swap rates, which are influenced by expectations of future interest rates and have been impacted by geopolitical events in the Middle East, leading to adjusted inflation expectations. The average five-year fixed homeowner mortgage rate has climbed to 5.68%, its highest point since May 11, while the average two-year fixed rate has risen to 5.63%.
Financial experts note that the recent increase in swap rates has begun to affect fixed-rate mortgage pricing, with further adjustments anticipated. The Bank of England currently holds interest rates at 3.75%, but its Monetary Policy Committee has adopted a cautious stance. Analysts suggest that a rate hike could be implemented as early as November, with the Bank's Chief Economist, Huw Pill, advocating for prompt and decisive action.