Leading UK lenders raise fixed-rate mortgage deals amid ‘market uncertainty’

Nicholas Mendes​, at broker John Charcol, said although lenders had ‘adjusted their positions’ borrowers are unlikely to see the same level of volatility and high rates as 2023.Photograph: Andy Rain/EPA

At least five leading lenders increased rates on their fixed mortgage deals on Tuesday in response to “market uncertainty”, adding to pressure on homebuyers and those looking to remortgage.

Barclays, HSBC, NatWest, Accord Mortgages (part of Yorkshire building society) and Leeds building society have all upped the cost of some fixed-rate deals. In some cases these have risen by up to 0.4 percentage points.

Money market swap rates – which largely determine the pricing of new fixed deals – “have ticked up slightly” in response to Bank of England interest rate expectations, prompting lenders to reprice some of their deals, said Danny Belton, head of lending at broker firm Mortgage Advice Bureau.

But Belton added that prospective buyers and remortgagers “shouldn’t panic … There are still deals to be had, and a handful of lenders holding rates or pricing down”.

Mortgage costs have endured a rollercoaster ride over the last two years. The fallout from the disastrous September 2022 mini-budget helped push the prices of many new fixed-rate deals to above 6%, but at the start of this year they dropped sharply – only to later start creeping back up.

During recent weeks the mortgage market has been relatively calm, but figures released last week showing a smaller-than-expected drop in inflation in March caused some economists to push back their forecasts for when the Bank starts to cut interest rates. City investors are pricing in two rate cuts by the end of the year.

While some lenders such as Accord have increased selected rates by up to 0.4 percentage points, others such as NatWest have opted for smaller hikes: it has lifted some of its two and five-year “switcher” deals for existing customers by 0.1 percentage points.

Nicholas Mendes​, mortgage technical manager at the broker John Charcol, said lenders had “adjusted their positions in response to market uncertainty”, although he added that borrowers “are unlikely to experience the same level of volatility and high rates as last year”.

Moneyfacts, the financial data provider, said on Tuesday that the average rate on a new fixed-rate deal lasting for two years had nudged up slightly to 5.83% – up from 5.8% at the start of this month. Meanwhile, the typical rate on a new five-year fix stands at 5.4% – up from 5.38% at the beginning of April.

However, the cheapest two- and five-year “best-buy” fixes were this week priced at 4.46% and 4.13%, respectively.