Major lenders increase mortgage rates as Iran conflict escalates – round-up
Halifax, Barclays and HSBC are among the latest lenders to increase mortgage pricing as the continuation of the conflict in the Middle East caused uncertainty.
Halifax has increased rates by as much as 0.2%, impacting two-, three- and five-year fixed mortgage pricing for homemovers and first-time buyers. The changes will also see the removal of Halifax’s sub-4% mortgage rates.
Elsewhere, Halifax’s tracker rates for first-time buyers and homemovers have gone up by 0.1%, while remortgage tracker rates have also risen by 0.1%.
The changes go live on 21 July.
Its parent company Lloyds Banking Group’s buy-to-let (BTL) brand, BM Solutions, has also upped rates by up to 0.19%, applied to purchase and remortgage deals for individual and limited company borrowers, along with increases to product transfer and further advance rates.
HSBC will also increase mortgage rates on 21 July, affecting its first-time buyer, homemover, remortgage and BTL pricing for UK and international borrowers.
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Skipton Building Society has announced rate increases taking effect from 21 July and will remove its current rates at 9pm on 20 July. Its fixed rate mortgages for new and existing borrowers will be impacted.
Further, Barclays has announced rate increases of up to 0.2% across purchase, remortgage and product transfer deals.
Small changes stacking up
Nick Mendes, product technical manager at John Charcol, said a 0.2% increase on a typical mortgage of £200,000 over 25 years added £23 to monthly repayments, or around £276 per year. On a £300,000 mortgage, this rises to around £35 per month, or £420 per year.
He said this was not a “dramatic jump on its own, but it’s the third or fourth such move in a matter of weeks, and each one stacks on the last for anyone still shopping around”.
Mendes said: “None of this is surprising. Swaps have been climbing since the Middle East escalated, with two-year SONIA up from 3.978% a month ago to 4.177% today and five-year from 4.008% to 4.231%.
“When a lender as prominent as Halifax moves, the rest of the market tends to fall in line within days.”
He said the inflation figures for June were due this week and expected to show an easing to around 2.6%, but the rising energy price cap and Iran conflict meant “any relief here is likely to be short-lived”.
“The Bank of England meets the following week on 30 July, and the vote split has been drifting hawkish, with two members already backing an immediate hike to 4%. My money’s still on a hold, but the debate inside the Monetary Policy Committee tells you which way the risk is skewed, and a rise, at this meeting or the one in September, looks more likely than a cut,” Mendes said.
The period of calm has ended
Hina Bhudia, partner at Knight Frank Finance, said: “Up until the end of last week, the market had been relatively calm, with borrowers benefitting from a range of competitively priced tracker and fixed rate products. However, a sharp rise in swap rates, driven by heightened geopolitical tensions and the escalating conflict in Iran, has prompted lenders to reprice.”
Last week, NatWest, Nationwide, Coventry Building Society and Virgin Money raised mortgage pricing.
Bhudia added: “In some cases, the increases are significant, highlighting how quickly uncertainty in global markets can feed through to mortgage pricing.”
