Major lenders raise mortgage rates amid geopolitical tensions
Three major UK lenders have increased mortgage rates following Andy Burnham’s appointment as Prime Minister, citing heightened geopolitical tensions and rising swap rates as the primary drivers.
Halifax, HSBC and Barclays all implemented rate increases, with Halifax raising rates by up to 0.2% across two, three and five-year fixed rate products for homemovers and first-time buyers. The changes resulted in the removal of Halifax’s sub-4% mortgage offerings.
Market drivers
Hina Bhudia, Partner at Knight Frank Finance, said the increases followed a period of relative stability in the mortgage market. “Up until the end of last week, the market had been relatively calm, with borrowers benefiting from a range of competitively priced tracker and fixed rate products,” she said.
“However, a sharp rise in swap rates, driven by heightened geopolitical tensions and the escalating conflict in Iran, has prompted lenders to reprice. In some cases, the increases are significant, highlighting how quickly uncertainty in global markets can feed through to mortgage pricing.”
The rate adjustments coincide with Rayner’s return as housing secretary under the new Prime Minister, as the property industry urges Burnham to prioritise housing reform.
Industry response
Mark Harris, chief executive of mortgage broker SPF Private Clients, attributed the repricing to swap rate volatility rather than domestic political uncertainty. “Re-escalation of the conflict in the Middle East has led to the jump in Swaps, rather than domestic political uncertainty, but there could be a bumpy ride ahead, which is the last thing the new Prime Minister needs,” he said.
Harris indicated that additional lenders are expected to follow suit with their own rate increases in response to market conditions.
Outlook
The rate increases mark a shift from recent market stability, with borrowers facing higher costs as global events continue to influence UK mortgage pricing. The timing presents an immediate challenge for the incoming government as it seeks to address housing market concerns.
