Nationwide hikes mortgage rates just weeks after cutting them
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Was mortgage interest below 4% a flash in the pan? Nationally, the cost of home loans increases just weeks after they are reduced
- Britain’s largest mortgage bank is raising many of its mortgage prices
- Nationwide said rising swap rates were to blame for the home loan increases
Nationwide Building Society raises mortgage rates by up to 0.20 percentage point, just over two weeks after a series of home loan cost cuts.
The news follows warnings from real estate experts that mortgage offers below 4 percent could soon disappear.
Nationwide, the nation’s largest mortgage bank, said it had to increase its mortgage costs because of swap rate hikes.
One of the largest increases in mortgage price is a 0.20 percentage point increase on a five-year, fixed-rate remortgage with a 40 percent down payment.
It cost 3.99 per cent on February 15, but now costs 4.19 per cent, with a fee of £999.
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The free version of the same product increased from 4.18 percent to 4.39 percent.
The five-year fixed rate for the first buyer with a 40 per cent down payment and £999 fee increased by 0.10 percentage point to 4.24 per cent, and the mortgage for movers with the same terms increased by the same amount.
Last month, Nationwide unveiled a series of mortgage rate cuts of up to 0.7 percentage points.
Today’s increases mainly relate to loans with larger deposits, and most of the cuts to products with lower deposits remain.
Country director of the home, Henry Jordan, said: ‘Over the past few months, we have continued to lower rates across our entire mortgage offering, including four times this year.
“However, given the recent rise in swap rates, we need to make some small increases to selected mortgage rates this week so that we can continue to balance our support for all types of borrowers with the need to ensure our rates remain sustainable.”
What’s next for mortgage rates?
Mortgage rates hit a peak not seen in years in the aftermath of September’s mini budget, with an average two-year rate fixing of more than 6.5 percent in October.
Although interest rates have since fallen, it is likely that the price of new fixed-rate mortgages will rise again in the near term.
That’s because swap rates are rising, and they help determine the price of fixed-rate mortgage payments.
Swap rates partly reflect what banks think will happen to the Bank of England’s base rate. This base rate is included in the price of variable-rate mortgages.
So if the banks are right and there are more base rate hikes, floating rate mortgage payments could also rise.