Mortgage rates can rise, that’s something everyone should be aware of. At some point rates must fluctuate as various economic factors change. Every so often they also decrease! But over the last few months we have began to see a bit of economic uncertainty and instability and quietly following behind are higher interest rates.
Due to recent events, most notably the global pandemic, inflation is slowly creeping up and up as the UK tries to recover and avoid full blown economic recession. The Bank of England dropped the base rate in March 2020 at the beginning of the pandemic when mandatory lockdown measures were put in place across the UK. The rate was dropped to 0.1% from 0.75% so that firms could be kept in business and people kept in jobs during the worst pandemic in 100 years. This then stayed at a plateau until around December 2021 when it jumped up sharply to 0.25% and then again in February 2022 to 0.5%, March 2022 to 0.75% and 1% as of May 2022.
With rising base rates, a lot of lenders raise their rates as well in line and two high-street lending giants Nationwide Building Society and TSB have announced that rates are rising across all their products. Here is a breakdown of the changes so far.
- Increased their rates for residential five-year fixed products and simplified its buy-to-let loan to value bands.
- Rates for their five-year fixed first-time buyer and house purchase 75% to 90% LTV with a £995 fee have increased by up to 0.35%.
- It has also increased the rate of its five-year fixed first-time buyer and house purchase new build 80% to 90% LTV with a £995 fee by as much as 0.35%.
- For its BTL offering, TSB has reintroduced a two-year fixed, two-year tracker and five-year fixed in its house purchase and remortgage ranges.
- TSB has also simplified its LTV bands to 0% to 60%, 60 to 75% and 75% to 80%.
- Nationwide has increased rates across its two, three, five and 10-year fixed products up to 95% loan to value.
- For first-time buyers, rates have increased by between 0.05% and 0.25%, while for those looking to move home, rates have risen between 0.02% and 0.20%.
- Remortgage rates have gone up by between 0.10% and 0.35%.
- Switcher and further advance rates have been increased by between 0.05% and 0.10%, while shared equity rates have risen by between 0.05% and 0.15%.
- Nationwide’s Green Additional Borrowing has also gone up by 0.20%.
A representative for Nationwide building society released the following statement to justify the rate increases, “The changes made to our new business range are reflective of the current interest rate environment, which has seen mortgage rates increase across the market. As a member-owned organisation we are not immune to this, and we need to ensure our new business mortgage rates are sustainable, whilst also ensuring Nationwide remains well-positioned in the market.”
Senior mortgage and protection advisor at Oportfolio Jade Pinkerton had this to say about the rate changes. “Although TSB has raised their rates the most, 0.35% isn’t a major change to be completely honest. The 0.10% and 0.25% increase for Nationwide is also fairly minor however the rate increase across the whole mortgage market since the Bank of England base rate rise has been quite significant. For the foreseeable future it looks like rates are going to keep on rising which is why getting yourself onto a fixed product and securing your mortgage rate and product for 2 – 5 years is always something that I would recommend. Speaking to a qualified advisor, getting a competitive rate, and getting a plan in place for the future is the best thing you can do to tackle rising interest rates.”
If you or someone you know is worried about rising interest rates and wants to speak to a friendly and knowledgeable mortgage profession, please give our team a call. We’re here to help.