NatWest has increased rates across its New Business range, with the latest move prompting renewed discussion around the factors that influence fixed-rate mortgage pricing. As Rachel Geddes, Strategic Lender Relationship Director at Mortgage Advice Bureau, explains, recent geopolitical uncertainty has pushed swap rates higher, while lenders price fixed-rate deals directly against them.
The relationship between swap rates and fixed mortgage pricing can therefore be an important consideration when assessing changes to mortgage products.
However, the Bank of England base rate is a separate factor, meaning changes to fixed-rate mortgage pricing do not necessarily reflect a change in the base rate itself.
In the latest reaction, Rachel discusses NatWest’s rate increases, the market factors behind the changes and the considerations for borrowers navigating the current mortgage market.
“NatWest has increased rates across its New Business range, following a domino effect of similar moves from lenders this month. However, swap rates are the trigger, not the Bank of England base rate. Renewed geopolitical uncertainty has pushed swaps back up, and lenders price their fixed deals directly off them.
First-time buyers will feel this most keenly. Higher LTV lending is the most rate-sensitive corner of the market, so getting a deal locked in now should be your priority. The same urgency applies to remortgagers who are coming to the end of their fixed term, as most lenders will still let you switch to something better if the market improves before completion. Homemovers with equity built up in their current place have a bit more of a cushion, but it’s still worth checking what you can actually borrow before you start seriously house-hunting.
None of this should mean putting your homebuying plans on ice, though. Rates are still well below the peaks we saw earlier this year, and this year alone has shown that lenders are quick to lower rates again once things settle down. The real risk isn’t rates rising a little further – it’s borrowers hesitating and missing the right deal while they wait to see what happens next.”
Rachel Geddes, Strategic Lender Relationship Director, Mortgage Advice Bureau
