Mortgage borrowers are facing a new round of rate increases as major lenders respond to rising swap rates. HSBC, Barclays, and NatWest are among the banks that have raised their mortgage rates since the start of September, according to Moneyfactscompare.co.uk.
More lenders are anticipated to follow suit in the coming days as banks and building societies review their pricing due to increased funding costs. Even modest increases could significantly impact borrowers.
Moneyfacts calculates that a 0.25 percentage point rise on a £250,000 mortgage, assuming a typical two-year fixed rate increases from 5.63% to 5.88%, would add around £38 to monthly repayments, totalling an extra £456 annually over a 25-year term.
Lenders closely monitor swap rates when setting prices for fixed-rate mortgages, and recent increases are compelling them to adjust their offerings. Rachel Springall, a finance commentator at Moneyfactscompare.co.uk, noted that pricing margins among major lenders are under pressure due to renewed volatility in the swap rate market, making rate adjustments somewhat inevitable.