“The story for mortgage rates in recent weeks has generally been positive, as cuts to fixed rates have dragged the market in a positive direction,” he said. “However, any borrower hoping for rate cuts to become an ongoing trend will need to rethink, as a growing number of lenders have announced impending hikes to fixed deals in the coming days.”
What is driving the reversal?
The market shift has been driven by geopolitical instability feeding through into the swap rates that underpin fixed mortgage pricing. This is not the first time the conflict has rattled lender pricing, with earlier rounds of repricing in March leading to Nationwide, Virgin Money and NatWest all moving within days of one another.
“The resumption of hostility in the Middle East has caused further uncertainty in financial markets, as the threat of higher interest rates returns,” Hollingworth said. “That’s affecting lenders’ funding costs and has already resulted in several major lenders announcing that they have increased fixed rates or are about to.”
The pace of change has been striking. Multiple major lenders have repriced within days of one another – a pattern Hollingworth said borrowers should read as a warning sign.
“Several moves in quick succession is usually a signal that others will not be far behind,” he said.