Mortgage rates rise at Virgin Money, LendInvest and Coutts as market uncertainty continues

Virgin Money, LendInvest and Coutts are among the latest mortgage lenders to pull back or raise fixed rates as swap rates continue to rise, driving up the cost of borrowing.

Others who have changed their prices include Nationwide, Aldermore, Leeds Building Society, The Bank of Ireland and the State Bank of India, with one broker describing this week as ‘a tough time for the mortgage market’.

On Friday, Virgin Money said it would increase some of its fixed income products by up to 0.12 percent. The lender also announced that flat rates for select product transfers will be increased by up to 0.10 percent.

Borrowers are under financial pressure, among other things, as the cost of capital has risen due to the expectation of future base interest rate hikes.

Both residential and buy-to-let products are affected. Aldermore has withdrawn all of its fixed rate products, both buy-to-let and home loans.

In a message to brokers, the lender said the move was in response to market conditions. Bank of Ireland is withdrawing some residential and all BTL rates, while Leeds Building Society has withdrawn some fixed rate products.

Private bank Coutts has increased the prices of its residential rates. A two-year fixed loan with an investment of 25 percent has increased from 5.04 percent to 5.74 percent.

For a £220,000 mortgage over 25 years, the monthly charge change goes from £1,291 to £1,383, an extra £1,104 per year.

The market is reacting to UK inflation remaining higher than expected at 8.7%, raising expectations that the Bank of England will continue to raise interest rates – the only tool in its arsenal to try to bring down rising costs .

As a result, markets now expect base rates to rise to 5.5 percent later this year. It currently stands at 4.5 percent after the central bank’s Monetary Policy Committee raised it by 0.25 percent earlier in May.

Since the inflation announcement, swap rates – the mechanism most lenders use to set their fixed rates – have risen and this is reflected in mortgage prices.

LendInvest has withdrawn all of its fixed-term buy-to-let products ahead of a relaunch on Tuesday next week, and the State Bank of India has also withdrawn all of its mortgage products to review prices.

Nicholas Mendes, mortgage technical manager at John Charcol, said: ‘Taking to a few lenders helps them avoid sudden changes because that reflects poorly on their relationship with brokers.

“Price appears to be an important issue, especially as we continue to see swaps increase. What we don’t want is lenders closing deals over the weekend.”

Mortgage holders coming off a fixed rate face a shock when they close a new deal

Mortgage holders coming off a fixed rate face a shock when they close a new deal

Specialized mortgage lender Stichting Woningkredieten will withdraw all its products from Friday afternoon to Wednesday 31 May.

A message to brokers stated that ‘in principle, all decisions must be submitted by the end of today (Friday 26 May) at the latest’.

Justin Moy, managing director at broker EHF Mortgages, said: “More and more lenders who rely heavily on swap rates to fund their products are pulling interest with little or no notice.

“A lot of these lenders are for the specialty markets, rather than the main residential customers, so the actual effect is quite small, but with the bulk of the high street already reviewed this week, it’s been a tough time for the mortgage market. ‘

What to do if you are looking for a new mortgage

If you have a fixed rate or other term mortgage, it’s worth thinking at least six to nine months ahead and researching your options.

Consider both what your existing lender has to offer – although some may not allow you to move until the time is right – and what a good mortgage broker recommends when it comes to switching to a new bank or building society.

Read our guide to re-mortgaging and what you need to know to understand more.

As rates have steadily increased, some lenders have extended the time frame in which existing customers can secure a new deal before your current mortgage expires. This allows borrowers to get a more favorable rate ahead of future increases.

And you don’t necessarily have to commit to the next product at this stage, so you can always reapply with another lender if rates drop before your deadline.

Carl Watchorn, First Direct’s head of mortgages, told This is Money: “For anyone coming to the end of a fixed-rate mortgage, either immediately or in the next six months, the most important thing is to get an interest rate six months in advance. can get.

“Try not to panic, get advice and make sure the product you want to sign up for gives you all the features you need.”

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate contract is about to expire, or because they have agreed on a home purchase, should explore their options as soon as possible.

This is Money’s best mortgage interest calculator powered by L&C that can show you deals that match your mortgage and property value

What if I have to borrow again?

Borrowers should compare rates and speak with a mortgage broker and be prepared to trade to secure a rate.

Anyone with a fixed-rate deal expiring in the next six to nine months should research how much it would cost them to re-mortgage now — and consider getting a new deal.

Most mortgage agreements allow fees to be added to the loan and are not charged until it is closed. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I buy a house?

Those with an agreed home purchase should also aim to secure rates as soon as possible so they know exactly what their monthly payments will be.

Homebuyers should be careful not to overextend themselves and be prepared for the possibility that house prices could fall from their current highs, due to higher mortgage rates limiting people’s borrowing capacity.

Compare mortgage payments

The best way to compare mortgage rates and find the right deal for you is to talk to a good real estate agent.

You can use our best mortgage interest calculator to display deals that match your home value, mortgage size, term and fixed interest needs.

However, bear in mind that rates can change quickly, so if you need a mortgage it’s advice to compare rates and then speak to an estate agent as soon as possible so they can help you find the right one mortgage for you.

> Check out the best fixed rate mortgages you can apply for

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