Barclays, HSBC and Halifax increasing mortgage rates

Lenders don't set mortgage rates in isolation. They're heavily influenced by swap rates, which reflect expectations for future interest rates and the wider economy. Recent uncertainty has pushed those funding costs higher, and we're now seeing some lenders pass that on through mortgage pricing.

That doesn't necessarily mean we're returning to the rapid rate rises borrowers experienced a couple of years ago. The mortgage market remains highly competitive, so while rates could edge higher in the short term if funding costs stay elevated, lenders will still be competing hard for business.

For borrowers, it's a reminder that mortgage pricing can change quickly. Waiting in the hope of securing a slightly lower rate can sometimes have the opposite effect if market conditions move against you.

TSB, Barclays and HSBC were the biggest lenders to announce rate hikes so far today. But the Halifax change probably means that Lloyds will be pushing up its cheap fixes as well which undercut virtually all of the other lenders by quite some margin. Halifax has a decent 4.33% two-year fix and a 4.37% five-year fix available until close of business today. We are starting to see most of the lenders raising their fixes and Halifax is even making its trackers more expensive which means it will no longer off a sub-4% variable rate deals. We can probably expect a few more rate changes over the next few days, so it is unlikely to be worth holding off booking a rate if you are buying somewhere or remortgaging. The continuation of the war in Iran is not good news for many reasons, and it certainly does not help bring any calm to the money markets.

There were signs this would happen last week. Swap rates have been creeping up, this is a result of instability globally and nationally. As long as bombs are flying around, mortgage rates will be turbulent. It also doesn’t help that we are changing PMs like football managers lately.

Four of the biggest mortgage lenders raising rates on the same day is the financial equivalent of going 4-0 down at half time, that is shocking, painful, and very difficult to come back from quickly. Barclays, HSBC, Halifax and BM Solutions have all moved simultaneously as swap rates climb on the back of rising oil prices and Middle East instability. The rate-cutting run of recent weeks is over, for now at least, and the market has turned.

The borrowers who acted when rates were falling have the bragging rights. Those still waiting for the perfect deal are watching the scoreboard move in the wrong direction. If your mortgage fix is ending soon, the team talk is simple: get off the bench and get advice now, before the final whistle sounds on the rates that were available last week.

This is the overhang from last week's rate increases, with the last batch of high-street lenders getting in line with the likes of NatWest and Nationwide. Swap rates continue to wobble around; the Middle East conflict hasn't gone away, and the new Prime Minister appointment will have a natural effect on the money markets, as we have seen change can happen quickly and not always for the better.

Mortgage rates are now moving in the wrong direction, and borrowers should not dismiss this as a one-off. Lenders price mortgages off market expectations, and those expectations have been jolted by higher global bond yields, stubborn inflation fears and tariff-driven uncertainty from Trump’s economic agenda. That feeds into swap rates, which feeds into fixed-rate mortgages. We are not back in the chaos of 2022, but the direction of travel has clearly become more uncomfortable. The cheapest deals may disappear quickly, and anyone within six months of remortgaging should be looking now rather than waiting for perfect conditions. Rates could edge higher still if markets think inflation will stay stickier for longer, but a sharp surge is not inevitable unless the global bond sell-off deepens.

Barclays, HSBC, and Halifax all increasing rates on the same morning. The signs were there last week - Iran, a new Prime Minister, markets on edge. None of this is a surprise.

What it is, though, is self-inflicted. Fixed mortgage rates move with swap rates, and swap rates move with political and economic confidence. Right now there's very little of either. The political class need to get a grip, because ordinary borrowers are the ones picking up the tab for the instability.

Don't wait for the dust to settle before making your mortgage decision. It may not settle anytime soon.