- The high street bank is upping its fixed rates by up to 0.35% from tomorrow
NatWest has become the latest bank to cut mortgage rates, the sixth major lender this week to announce fixed home loan prices are going up.
NatWest is pushing its fixed rates up by up to 0.35 percentage points from tomorrow.
The move could see some of the lowest fixed rate deals disappear from the market with almost all sub 4 per cent deals now gone.
Shock: NatWest is increasing fixed mortgage rates alongside other lenders despite the Bank of England cutting base rate last week
NatWest is currently offering a five-year fixed rate of 3.84 per cent with a £1,495 fee for home movers buying with at least a 40 per cent deposit and 3.92 per cent for people remortgaging.
NatWest’s lowest two-year fix is also currently 3.99 per cent – that is also likely to go up from tomorrow.
The spate of rate hikes will seem counterintuitive given the Bank of England cut interest rates from 5 per cent to 4.75 per cent, last Thursday.
Lenders are pricing upwards as a result of heightened inflation expectations after the Labour Budget and Trump election win.
Fixed-rate mortgage pricing is largely based on Sonia swap rates – the inter-bank lending rate, based on future interest rate expectations.
When Sonia swaps rise sufficiently it often results in fixed mortgage rates going up, and vice versa when they fall.
As of 11 November, five-year swaps were at 3.97 per cent and two-year swaps were at 4.2 per cent.
Five-year swaps are up from 3.87 per cent on 29 October – the day before the Budget. They are up from 3.7 per cent on 24 October.
Justin Moy, managing director at Chelmsford-based EHF Mortgages told the news agency Newspage: ‘Several lenders made their move yesterday, and NatWest was the last one standing on price.
‘These significant increases of up to 0.35 per cent will hurt borrowers’ pockets, as swap rates spiral off the recent uncertainty.
‘A falling base rate doesn’t mean that mortgage rates always follow suit; it’s quite the reverse at the moment, and the outlook doesn’t have a lot of festive cheer either.’
Michelle Lawson, director at Lawson Financial added: ‘NatWest become the latest of the big guns to hike their rates.
‘The delayed ripple effects from the Budget seem to be trickling through now. This appears to be a spectacular own goal from Labour.
‘Was it intended or unintended? I don’t even think they know themselves.
‘Tax hikes on business are causing shocks in the labour market and are giving the markets the wobbles.’