NatWest hikes up mortgage rates in surprise move
NatWest is set to increase its mortgage rates despite a bigger than expected drop in interest rates
PA
NatWest is set to increase its mortgage rates despite a bigger than expected drop in interest rates.
New data revealed inflation in Britain has dropped to 7.9 per cent in the year to June, however the bank said it will raise a number of fixed rate deals by up to 0.3 percentage points from today.
The increase will hit two-year and five-year deals for 90 per cent loan-to-value mortgages.
Its rates will also surge by up to 0.4 per cent on selected 95 per cent loan-to-value five-year deals.
The increase will hit two-year and five-year deals for 90 per cent loan-to-value mortgages
PABut the price hikes come as a sharp fall in interest rate is expected after a surprise drop in inflation.
The consumer price index (CPI) measure of inflation shows prices are still rising, just at a slower pace than before, as the rate fell from 8.7 per cent in the year to May.
Most economists had expected the rate of inflation to fall to 8.2 per cent in June.
June’s figures could see the Bank of England opt for a smaller increase in interest rates at its next meeting in August after June’s half a percentage point shock hike to 5 per cent, according to experts.
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Two-year swap rates – an indicator for mortgage rates – dropped by 0.3 per cent, from 5.73 per cent to 5.42 per cent.
Interest swap rates are used by mortgage lenders to estimate what their funding costs will be over the course of new fixed-rate mortgages they issue.
Despite inflation dropping more than expected, it still remains high - but sparked hopes that mortgage rates may have peaked and could soon be falling.
“The lower-than-expected CPI inflation data for June probably signals the end of the upward march in mortgage rates," Andrew Wishart, senior property economist at Capital Economics told The Telegraph.
It comes after NatWest, which is the parent of private lender Coutts, came under fire following the closure of GB News presenter Nigel Farage's bank account
PA“But mortgage rates are likely to plateau rather than fall as the Bank of England keeps interest rates high until next summer and lenders rebuild their margins.”
According to Moneyfacts, the average two-year fixed rate stood at 6.8 per cent on Wednesday.
It comes after NatWest, which is the parent of private lender Coutts, came under fire following the closure of GB News presenter Nigel Farage's bank account.
His Coutts account was shut down after the bank took against his views, branding him “xenophobic and racist” in internal documents.