Were mortgage rates below 4% a flash in the pan? Nationwide hikes cost of home loans just weeks after cutting them
- The biggest UK building society is increasing many of its mortgage prices
- Nationwide said rising swap rates were to blame for the home loan hikes
Nationwide Building Society is increasing mortgage rates by up to 0.20 percentage points, just over two weeks after making a series of cuts to its home loan costs.
The news follows warnings from property experts that mortgage offers below 4 per cent could soon disappear.
Nationwide, the country’s largest building society, said it had to raise its mortgage costs because of increases to swap rates.
One of the largest mortgage price hikes is an increase of 0.20 percentage points on a five-year fixed rate remortgage deal with a 40 per cent deposit.
It was priced at 3.99 per cent on 15 February but now costs 4.19 per cent, with a £999 fee.
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The fee-free version of the same product has gone up from 4.18 per cent to 4.39 per cent.
Its first-time buyer five-year fixed rate with a 40 per cent deposit and a £999 fee has increased by 0.10 percentage points to 4.24 per cent, and its home mover mortgage with the same terms has increased the same amount.
Just last month Nationwide unveiled a series of cuts to its mortgage rates of up to 0.7 percentage points.
Today’s rises have mostly been on loans with larger deposits, and most of the cuts to lower-deposit products remain.
Nationwide director of home Henry Jordan said: ‘Over the last few months, we have continued to lower rates across our mortgage range, including doing so four times this year.
‘However, given the recent increase in swap rates, we are having to make some small increases on selected mortgage rates this week so that we can continue to balance our support for all types of borrowers with the need to ensure our rates remain sustainable.’
What is next for mortgage rates?
Mortgage rates reached peaks not seen for some years in the wake of September’s mini-Budget, with the average two-year fix topping 6.5 per cent in October.
While rates have come down since then, it is likely that the price of new fixed-rate mortgages will rise again over the short term.
That is because swap rates are increasing, and these help set the price of fixed-rate mortgage costs.
Swap rates partly reflect what banks think will happen with Bank of England base rate. That base rate is factored in to the price of variable-rate mortgages.
So if the banks are right, and more base rate hikes are coming, then variable-rate mortgage costs could rise too.