UK lenders raise mortgage rates as Middle East tensions lift swap costs

Traders Union
All News
Financial News
UK mortgage rates rise

Highlights

Barclays, NatWest, Nationwide, Coventry Building Society and Virgin Money are raising fixed mortgage rates by up to 0.35 percentage points this week as UK swap rates climb.
Nationwide's two-year fixed rate rises from 4.24 per cent to 4.59 per cent, adding about £480 annually to repayments on a £200,000 loan over 25 years.
Lloyds launches fixed-rate mortgages from 4.13 per cent for Premier customers earning £100,000+, while Nationwide expands larger-loan access by lowering the minimum income threshold to £75,000.

Fixed-rate repricing gathers pace

As reported by Financial Times, Barclays, NatWest, Nationwide, Coventry Building Society and Virgin Money are raising fixed mortgage rates this week, with some increases reaching 0.35 percentage points.

One two-year fixed deal from Nationwide rises from 4.24 per cent to 4.59 per cent, a change that adds about £480 a year in repayments on a £200,000 loan over 25 years.

Brokers and finance experts say the repricing reflects higher UK swap rates, which lenders use to guide fixed mortgage pricing. Two-year swap rates, already elevated since the start of the Iran war, rise from 3.95 per cent on June 26 to 4.22 per cent on Thursday.

Rachel Springall, finance expert at Moneyfacts, says borrowers are likely to be disappointed by another rise in mortgage pricing and adds that geopolitical tensions are showing how quickly financial markets can react. David Hollingworth, associate director at L&C Mortgages, says several rapid lender moves are often a sign that more increases may follow.

Aaron Strutt, product director at broker Trinity Financial, also says further price hikes seem likely, although he notes that some lower-priced products remain available for borrowers willing to consider shorter fixes or tracker loans.

Borrower options and lending competition

Hollingworth urges borrowers nearing the end of a fixed term to secure their next rate soon as a precaution, while keeping open the option to review pricing again before completion if market conditions improve.

Strutt says many borrowers are still choosing two-year fixed deals priced around 4.3 per cent and tracker mortgages below 4 per cent, particularly if they expect the Bank of England to cut the base rate from 3.75 per cent this year or want more flexibility. Brokers often recommend tracker products during periods of uncertainty because lenders rarely penalise customers who later switch to a fixed rate when pricing becomes more attractive.

Even as it raises fixed rates, Nationwide is widening access to larger loans by lowering the minimum income threshold for new customers seeking mortgages of up to six times salary. Borrowers with annual income of £75,000 now qualify, down from £100,000.

Lloyds is also introducing lower-priced mortgage offers for Premier account holders earning £100,000 or more, with fixed rates starting from 4.13 per cent for eligible first-time buyers and home movers, below the market average.

In our earlier coverage of UK fixed mortgage repricing, we explained how renewed market volatility pushed swap rates higher and fed through to rate increases from major lenders including Barclays, NatWest and Nationwide. We also outlined what this meant for borrowers weighing two-year fixes versus trackers, and noted that lenders were still competing in pockets of the market through eligibility tweaks and targeted offers.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.