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‘Mixed messages’ in mortgage market as Nationwide ups rates while Santander cuts on same day

 (Evening Standard composite)
(Evening Standard composite)

Brokers said the UK mortgage market is in a ‘yo-yo’ state today, as Nationwide upped its interest rates on the same day that Santander said it would cut prices.

Nationwide, the country’s biggest building society, said it  was upping the interest rate on certain mortgages by up to 0.25 percentage points, soon after Halifax and HSBC announced rate rises of their own. Nationwide last cut rates in late January, dramatically slashing prices by up to 0.81 percentage points after a long wait at the start of the year, and increased rates on many products again after the Bank of England held its base rate earlier this month.

But Santander went in the other direction. The bank cut rates, albeit by a relatively small amount, with reductions of up to 0.16 percentage points.

The latest changes come ahead of a big week for economic data, which could lead to a clearer picture of whether the Bank of England will cut its own base rate soon or leave it at 5.25% for many more months. Until that clarity arrives, mortgage prices appear to be in a state of limbo.

Justin Moy, managing director at EHF mortgages, said: “This is a surprising but welcome move by Santander given how the market has reacted to increasing SWAP rates over the past few weeks. While the savings are small, this is more about reversing those recent increases and will give borrowers renewed confidence. We're currently in a yo-yo mortgage market.”

Ken James, director at Contractor Mortgage Services, said: “The ebb and flow of the mortgage market continues to send mixed messages to the public. One day we are announcing rate increases, the next day we are announcing decreases. What's certain is that you cannot rest on your laurels, as this is a very fast-moving market. The rate cuts, albeit small, are very welcome. The message to all borrowers is don't sit on the fence, but get your deals secured just in case the next news announcement is a rate increase.”

New figures published today from Moneyfacts show that the average two-year fixed mortgage rate on the market recorded its biggest month-on-month fall since December 2022 in January.

Across all deposit sizes, the average two-year fixed-rate mortgage had a rate of 5.56% at the start of February 2024, down from 5.93% at the start of January this year.