Two major mortgage lenders in the UK are planning to raise mortgage rates, signaling the impact of the conflict in the Middle East on borrowers. HSBC is set to raise fixed-rate home loan costs starting today, with Coventry Building Society following suit from Monday.
While specific details are yet to be confirmed, experts anticipate that other lenders will also increase their rates, affecting individuals seeking new home loans or looking to remortgage.
This move by lenders is a response to the potential rise in inflation due to the ongoing conflict between the US, Israel, and Iran. Fixed-rate mortgage costs are influenced by swap rates, which have surged following the recent conflict. Additionally, the Bank of England is likely to postpone an expected interest rate cut this month.
David Hollingworth, associate director at broker L&C Mortgages, highlighted that higher inflationary pressure from the Middle East conflict is leading to the adjustment of fixed-rate mortgage prices, ultimately pushing rates up. He emphasized the importance for borrowers to secure fixed rates promptly given the current uncertain market conditions.
Industry experts at Moneyfacts reported an increase in average two-year fixed residential mortgage rates to 4.83%, with the average five-year fix rising to 4.95%. Adam French, head of consumer finance at Moneyfacts, noted that rising swap rates, driven by the conflict in the Middle East, are impacting mortgage rates and potentially hindering the recent trend of lower rates.
The situation serves as a reminder that mortgage costs are influenced not only by domestic policies but also by global geopolitical events, underscoring the interconnectedness of markets and the impact on borrower deals amidst challenging global events.
