AUS
NZ
UK
CA
USA
IND
Highlights:
- Lloyds, Barclays, NatWest Hike Rates: Three major UK lenders raise mortgage rates despite expectations of future BoE rate cuts.
- Halifax and Barclays Rate Increases: Halifax and Barclays raise rates on fixed mortgages and remortgage products by up to 0.24%.
- Speculation on Economic Fallout: Experts suggest rate hikes may be temporary, linked to swap rates and potential economic concerns from the upcoming Autumn Budget.
Lloyds Banking Group PLC (LSE:LLOY) and Barclays PLC (LSE:BARC) have joined NatWest in increasing mortgage rates, surprising many given expectations that the Bank of England (BoE) will lower borrowing costs within the next two months.
Starting tomorrow, Halifax, a subsidiary of FTSE 100-listed Lloyds, will hike rates on its two-year and five-year fixed mortgage products by between 0.11% and 0.24%. The rate increases will also impact those looking to remortgage or extend existing loans through Halifax’s mortgage transfer products.
Similarly, Barclays announced a rise in its mortgage rates, with most purchase and remortgage options increasing by 0.2%. This follows earlier moves from NatWest, meaning three of the UK's largest high street banks will no longer offer mortgage rates below 4%, except for select five-year fixed deals.
Reasons for Rate Increases Industry experts suggest that the rate hikes may be an attempt by lenders to protect their profit margins. Rohit Kohli, director at The Mortgage Stop, pointed out that the decisions by these major banks were unexpected but hinted that more lenders may soon follow suit.
The timing of these hikes has raised questions, especially with many predicting that the BoE will cut interest rates at its November and December meetings, after UK inflation fell to a three-year low. Some speculate that these banks may be anticipating a tougher-than-expected economic outcome from the upcoming Autumn Budget, which is set to be delivered by Chancellor Rachel Reeves on 30 October.
Temporary Market Reactions? Despite the hikes, some believe this could be a short-term shift. Craig Fish, director at Lodestone Mortgages & Protection, described the mortgage increases as "a temporary blip," driven by the recent rise in interest rate swaps. He predicted that as swap rates continue to decline, mortgage rates are likely to follow suit in the coming days, assuming no drastic moves in the upcoming budget.
Fish’s sentiment was echoed by Stephen Perkins, managing director at Yellow Brick Mortgages, who suggested that unless lenders foresee a significant economic downturn post-budget, they may reverse these rate hikes in the near future.
