Barclays and NatWest have become the latest major high street lenders to increase their fixed mortgage rates, with changes taking effect yesterday.
The move pushes interest rates above four per cent, marking a significant shift in the mortgage market.
These adjustments follow a wave of similar rate increases from other leading banks this week.
High street banks and building societies have hiked mortgage rates in recent years following recent actions from the Bank of England.
The central bank’s Monetary Policy Committee (MPC) raised, and kept, the base rate at 5.25 per cent up until very recently.
This was part of the Bank’s efforts to reign in the consumer price index (CPI) rate of inflation.
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Sub-4 per cent mortgage deals are being withdrawn from the market
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Multiple major lenders have already implemented rate increases this week, including Santander, HSBC, Nationwide and TSB.
The trend has left Allied Irish Bank as the sole remaining provider of mortgage rates below four per cent.
The rapid disappearance of these lower rates marks a notable turning point in the UK’s mortgage market offerings.
David Hollingworth, Associate Director at L&C Mortgages, explains that recent weeks have seen rates consistently pushed higher.
“The slew of rate changes in recent weeks has continued to push rates higher, reflecting the higher costs for lenders, as the market outlook for rates has edged toward a higher for longer expectation,” he said.
He noted that while several lenders had managed to maintain fixed rates below four per cent until now, this position had become increasingly difficult to sustain.
The shift above four per cent had an air of inevitability, according to Hollingworth, with all major UK lenders’ fixed rates now moving beyond this threshold.
Despite these increases, he emphasised there’s no indication of rates “skyrocketing” as seen in recent years.
The Bank of England has recently cut its base rate to 4.75 per cent from five per cent, marking the second reduction this year.
This follows an earlier cut from 5.25 per cent to five per cent in August, potentially influencing mortgage and savings rates across the market.
However, despite these base rate reductions, mortgage experts advise swift action from borrowers.
“Forecasting and perception changes frequently but for now borrowers should grab a rate whilst they can, to avoid missing out if the deal is subsequently withdrawn,” Hollingworth cautioned.
