NatWest and Coutts Increase Mortgage Rates Despite Drop in Inflation to 7.9%

by | Wednesday 19th Jul 2023 | Mortgage News

This afternoon, mortgage lenders NatWest and Coutts, have announced rate increases on their mortgage products, despite the recent drop in inflation to 7.9%. The decision has left many customers puzzled, as the current economic climate suggests that there could soon be a drop in interest rates rather than an increase.

What Are the Rate Increases From NatWest and Coutts?

NatWest, in an email correspondence to all subscribing mortgage brokers, unveiled the changes to its new business rates, affecting various loan-to-values (LTV). For new purchase deals submitted by brokers, customers can expect rate increases of up to 0.20 % on selected 90% LTV 2 and 5-year offers (10% deposit mortgages). Meanwhile, the rate hike for the selected 95% LTV 5-year deal (5% deposit) will be even steeper, with an increase of up to 0.40%.

The situation isn’t any better for remortgaging customers and first-time buyers. NatWest will be introducing rate increases of up to 0.20% and 0.30% on selected 90% LTV 2 and 5-year deals for both types of borrower. To us at Oportfolio, this move comes as a surprise, given the challenging conditions many first-time buyers face in the housing market currently and historically.

New Products From NatWest

In addition to the rate increases announced today, NatWest have also introduced new products for remortgaging customers, offering two new 5-year fixed rate deals at 60% LTV with £250 cashback. This move likely aims to attract borrowers seeking some sort of stability in their payments amid the cost of living crisis.

But NatWest’s decision doesn’t end with the new business rates. Existing customers looking to switch deals will also face rate adjustments. The bank is implementing a rate increase of up to 0.25% on selected 2-year deals, but on a positive note, there will be a rate decrease of 0.5% on selected 5-year deals.

Changes To Variable Rate For Coutts

As if the news from NatWest wasn’t enough, Coutts, renowned for serving high net worth individuals, is also making changes. The bank will be increasing its variable rate across all mortgage products to 7.75%. This means that borrowers ending fixed period loans will automatically fall onto a rate of 7.75%, unless they opt to choose another fixed rate product. This seems to be a very interesting move, where a drop in inflation would typically encourage banks to ease lending rates and offer attractive mortgage packages to stimulate property investment.

Speak To a Mortgage Advisor

As borrowers grapple with the increased mortgage rates, we at Oportfolio anticipate a surge in inquiries from homeowners looking to lock in their existing rates or explore more competitive offers from other lenders. We can’t stress enough the importance of reviewing your current mortgage arrangements if you own a property. Right now, rates could go either way, and the best way to stay on top of market changes is to speak with one of our advisors at Oportfolio. Call our team today for a free initial mortgage consultation. We are here to help.

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If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

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