On Monday, Nationwide, Santander, Virgin and NatWest all announced rate cuts
First-time buyers warned to ‘hurry’ and lock into mortgage rate(Image: PA)
Brokers have urged borrowers to “get their skates on” and lock into a rate if they’re currently looking to take out a mortgage, or are remortgaging in the months ahead, as rising swap rates, which are used to price fixed-rate mortgages, could soon see recent price reductions go into reverse.
Over the past few weeks, lenders have been consistently cutting rates, in part to stimulate the market after a quiet spring but also as a result of easing tensions in the Middle East.
On Monday, Nationwide, Santander, Virgin and NatWest all announced rate cuts.
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But experts have warned tough new rhetoric from Trump and soaring gilt yields due to chaos in government after the local elections and Starmer’s premiership being under threat, could see the run of rate reductions come to an end in a matter of days.
Speaking to Newspage, Wesley Davidson, Director at Bristol-based FD Commercial, said: “Swaps are climbing for three reasons that reinforce each other.
“UK political risk has returned after Labour’s local election losses and the calls for Starmer to go, pushing 10-year gilts above 5.1%, their highest since 2008.
“Brent is back above $105 as the Iran situation drags on, feeding UK inflation through fuel and transport.
“On top of that, the Bank of England’s Monetary Policy Committee has turned hawkish, with markets pricing 2-3 rate hikes by year-end rather than the cuts we were discussing in February.
“If swaps keep rising at this pace, recent fixed-rate cuts will stall within days and reverse within weeks. Lenders cannot absorb 20 to 30 basis points of funding cost without repricing.
“My advice to borrowers is simple: if you are remortgaging in the next six months, secure a rate now. If pricing improves before you complete, you can switch to the better deal.
“If it gets worse, you are protected. The next major test is the inflation print on 21 May. If it comes in high, the next move is a hike.”
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