Nationwide revealed today that it is set to raise its mortgage prices, on the same day the Bank of England opted to hold its base rate.
The country’s largest building society says it’ll increase rates by up to 0.3 percentage points on selected mortgage products. The higher rates will come into effect tomorrow (2 February).
It comes as the Bank of England seemingly poured cold water on hopes of spring interest rate cuts after holding its base rate at 5.25% today. The Bank’s governor Andrew Bailey noted that, based on amount of the interest rates that had been implied by the market, inflation would likely remain above the Bank’s 2% target all the way until 2027.
Laith Khalaf, head of investment analysis at AJ Bell, said: “Mortgage rates have been dropping back in recent months, providing some much needed respite to beleaguered homeowners. This latest decision from the Bank of England might firm up mortgage pricing a bit, but it’s unlikely to have a huge effect. That doesn’t mean there isn’t still a lot of pain in the post this year for mortgage borrowers, as millions will be stepping back through the looking glass from the heady days of near zero interest rates into a much harsher reality.”
Speaking to Newspage, Justin Moy, managing director of broker EHF Mortgages, noted that the speed of Nationwide’s rise was a stark contrast to its relative lateness to cut rates this year when hopes of interest rate cuts were growing.
Moy said: “Given Nationwide was late to the table of rate cuts in January, it's surprising to see them react so quickly in February, but this does show that the cost of funds is increasing and lenders are having to readjust their rates with little notice.
“Nationwide does allow brokers to reserve deals in advance, which is an important benefit, especially in a market where rates are increasing. No change for existing clients looking for a new deal, but those looking to refinance or purchase will be affected.”