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Major lenders hike rates ahead of Bank of England rate decision

Journalist: Justin Moy, Contributing Editor

ended 06. November 2024

Ahead of Thursday's Bank of England rate decision, a wide range of lenders including Halifax, The Mortgage Works, BM Solutions and Virgin Money announced rate increases of up to 0.25% on Wednesday, reflecting the increase in wholesale money rates since the Budget. Newspage asked brokers if this is a sign of things to come or the usual ‘lender jitters’ before the base rate decision on Thursday. Their views are below.

13 responses from the Newspage community

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Rohit Kohli
Director at The Mortgage Stop
On the eve of what everyone expects to be a 25 basis point cut from the Bank of England, it’s disheartening to see so many lenders swiftly spike rates, effectively stripping away any benefit borrowers might have seen. With the upcoming US power transition, market volatility is inevitable until January. As the US election results show, with so much unpredictability, it's anyone’s guess what may happen next. Until then, I anticipate rates will continue to yo-yo, and expectations of a further cut in December now seem very unlikely. At best, we might see a cut at some point in Q1 2025.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
With a reaction quicker than hitting a knee with a hammer, many lenders have increased rates following the spike in swap rates since the Autumn Budget. On a more positive note, this will give lenders some room to potentially reduce again next week after an expected base rate reduction on Thursday.
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Justin Moy
Managing Director at EHF Mortgages
Another flurry of rate increases is never welcome. The hope is that it's just a small blip in the wider reduction of rates over a longer period. Swap rates have been increasing since the Budget, as the markets haven't warmed to the news of extra spending plans, and the initial reaction of Swaps to the US election outcome suggests that Trump has done more to reduce rates than our Chancellor has achieved. This acts as a reminder to everyone that rates can move quickly, and you will often need to make decisions rapidly to secure rates. They can be altered if the cost of funds does start to reduce again.
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Michelle Lawson
Director at Lawson Financial
More lenders join the rush to the top. This will be the new norm again for now. US markets are yet to react after today’s news so we will likely see more joining the melee.
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Aaron Strutt
Product and Communications Director at Trinity Financial
Many specialist and buy-to-let lenders increased their rates last week and now the bigger providers are starting to bump up their prices. We have been expecting these rate hikes for a few days now given the cost of funding increases, and it is actually a surprise some of them have taken so long. Other big banks and building societies are set to make mortgages more expensive over the coming days so if you are on the hunt for a good deal it is worth securing a rate now.
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Simon Bridgland
Director at Charwin Private Clients
Today has seen a raft of lenders increasing fixed interest rates, following the increases in the cost of wholesale money over the past fortnight. That increase in the cost of funds is now being passed onto UK borrowers. Even with the likelihood of a base rate cut tomorrow, the ping of emails from lenders can be heard, signalling a flood of fixed rate increases across the marketplace. Now enter Donald J Trump into the mix with his US election win, sending further shockwaves around the world in the coming days, it's likely not just the Democrats who will be licking their wounds at the weekend, as borrowers around the world brace themselves for further increases in the cost of fixed rate borrowing.
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Ben Perks
Managing Director at Orchard Financial Advisers
The optimist in me thinks that this is just lenders taking stock and getting on top of service levels. If the Base Rate is cut tomorrow, its could boost confidence in the market. Swap rates would react positively to this and then lenders can get themselves entagled in another rate war. Bring it on.
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Dariusz Karpowicz
Director at Albion Financial Advice
The mortgage lenders must be getting a touch of the pre-decision jitters! With the Bank of England's big rate announcement just around the corner, it seems these industry giants are taking a cautious approach and making some pre-emptive tweaks to their fixed-rate offerings. While the market may be anticipating a cut, I suspect we won't see any earth-shattering movements in rates until the dust settles after the BoE's decision. Until then, it's likely to be a game of small, measured adjustments as the lenders try to position themselves for whatever the future may hold. One thing's for sure - it's certainly an exciting time to be a mortgage broker, navigating these shifting sands on behalf of your clients!
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Harps Garcha
Director at Brooklyns Financial
Mainstream lenders are only now catching up with recent SWAP rate increases, whereas most specialist lenders adjusted their rates over the last few weeks. With the Bank of England meeting tomorrow and the U.S. election results today, the future remains highly uncertain.
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David Stirling
Independent Financial Advisor at Mint Wealth
Some of the big lenders have altered their rates in trepidation of the market reaction to Trump's victory in the US elections and Thursday's predicted BoE rate reduction. This is hopefully just a knee-jerk reaction as swap rates have also increased in the last few weeks due to the uncertainty looming. With the Budget now out of the way, it's hard to remain totally optimistic that the dust will settle quickly with all these moving parts grinding at once. It's difficult to see mortgage rates get more competitive to see out the year end, but stranger things have happened in 2024.
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Kelsey Phillips
Head of Specialist Lending at Arose Finance
In the near-term, Trump’s election victory could support further upward pressure on UK mortgage rates. With the Bank of England’s penultimate monetary policy decision of the year on Thursday, US financial markets are buoyant post Republican victory. By contrast, today EURUSD has nosedived by 2% and the GBPUSD has depreciated to 1.29 – a symptom of comparative growth and productivity trajectories. If Cable remains depreciated and import tariffs are imposed, the consequent inflationary pressures could ultimately support higher UK Gilt yields. In that environment, we could see marginally higher mortgage rates and the Bank of England cutting more cautiously than previously anticipated. All eyes are on Thursday's decision.
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Kim McGinley
Director & Specialist Broker at VIBE Finance
Today’s lender rate increases feel like just another blip in what’s been a rollercoaster year for brokers, and it should all settle down soon enough. But what’s really frustrating is the way some lenders are setting deadlines and then shifting them at the last minute when volumes pick up. Brokers are already juggling so much, and these sudden changes throw everyone off balance: borrowers, brokers, the whole process. If you set a deadline, stick to it. Consistency is key, and these last minute shifts are simply not good enough. Let’s make it easier, not harder, for everyone involved.
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Aman Aneja
Mortgage Expert at AA Mortgage Services
Rates have only been going up for over a week now where the last of the bigger lenders are playing catch up with the others. Although we are expecting a base rate cut next week and probably onother one in the new year, any gains that could have been expected in the short-term will not longer be there. However, i expect there to be another price war in the new year when the next base rate ct happens. Most consumers are under the impression rates will only go down and have been left dismayed at the recent bout of rate increases. In this day & age i say a rate around the 4% mark is a good point to fix.