Barclays and HSBC have announced mortgage rate increases this week as NatWest revealed it was cutting prices.
Whilst Barclays’ rate hikes are small, averaging 0.2% across its fixed rate range and in line with the increases announced by HSBC, it comes after several lenders also tweaked their prices upwards.
But the announcement NatWest was cutting rates from 11 June by up to 0.23% may create some confusion amongst borrowers over what exactly is happening to mortgage rates at the moment.
Indeed, this comes nearly a week after Nationwide made price cuts of up to 0.12%.
Data released today by Moneyfacts shows average mortgage rates are continuing to fall – although the decrease is more modest in June than it was in May.
So does this mean mortgage rates are going up or down? What’s more, should borrowers expect prices to stall in the next few months or start increasing again?
Harry Goodliffe, director at HTG Mortgages talking to the Newspage agency, thinks increases were more likely and we were definitely seeing the sub-4% deals slip away, and fast.
These mortgage deals, which had rates below 4% – some as low as 3.79% – began emerging at the end of April and in early May when the market had predicted and priced in the Bank of England’s May base rate cut.
Goodliffe added: “Barclays and HSBC hiking rates feels like a mix of reacting to rising funding costs and not wanting to be overwhelmed with demand. No lender wants to be too competitive in a market this uncertain.
“NatWest dropping rates earlier today was a bit of a curveball, but I don’t expect it to set a trend. The overall direction still feels upward. If you’re waiting for things to get cheaper, you might be waiting a while.”
His views were echoed by Aaron Strutt, product and communications director at Trinity Financial, also speaking to Newspage. He said: “Some borrowers still believe we are in a rate-cutting environment where mortgages are getting cheaper, but this is generally not the case.”
He advised, whilst there were still some good deals around, this might not be the case for long.
“For the moment,” he said, “lenders such as Nationwide, Santander and Barclays for Intermediaries still offer sub-4% mortgages. Even with the recent price increases, mortgages should remain pretty reasonably priced over the near term.
“There are still some decent fixes and tracker options available now, but there are certainly fewer three and five-year fixes priced around 3.99%.
“While the cost of funding does seem to have stabilised, it would not be a surprise to see more lenders pushing up their prices over the coming days.”
