Nationwide hiking mortgage rates amid Middle East war

It's now crystal clear that the events of the past week have spooked the markets, which has created a lot of volatility and driven increases in swap rates, which are used to price fixed rate mortgages. Irrespective of the rise in swap rate, it's the volatility that pushes lenders to increase their rates so they can absorb that volatility. We are seeing lots of lenders increase and expect more to come until the dust settles, although there is little clarity on that front.

Expected increases given that one or two high street lenders have already been forced to change rates in the wake of the Middle East war. Others will inevitably follow over the next few days, as lenders are unlikely to want to be 'the cheapest' in this kind of environment. Shopping around is essential, and using a Mortgage Broker is vital to finding the right deal and what you qualify for, too. Nationwide does allow for product reservations in advance of any full application, which is a great opportunity. Your rate is not secured until you have provided all documents and completed a full application, so be document-ready and able to respond to your broker quickly.

Thursday has brought bad news for borrowers, with three major lenders now hiking rates. Events in the Middle East are creating a lot of uncertainty and creating genuine concerns about inflation. The Bank of England's confident forecasts about the direction of inflation have not aged well at all.

Nationwide’s rate hikes should be viewed as a clear signal of impending across-the-board increases from other lenders. It remains uncertain whether this is a deeper setback or a minor wobble caused by market volatility. At present, this appears to be cautious repricing in the face of the unknown rather than a definitive statement on future direction, though the situation in Iran has undoubtedly heightened uncertainty. That said, rates remain at recent lows; there is currently no evidence of panic or a sustained upward trend in mortgage rates.

Nationwide's rate rises tomorrow are part of a wider pattern we've been watching for a few weeks now. Several lenders have nudged rates upward, and Nationwide is the latest to follow. Swap rates are the driver here. Markets have repriced expectations around when the Bank of England will cut, and that feeds directly into fixed rate pricing. Geopolitical uncertainty, including the Middle East situation, adds volatility to the broader picture, but swap rate movement is the more immediate mechanism lenders are responding to. Are we in a flurry of rises? It feels that way, but I'd caution against panic. Rates remain materially lower than the peaks of 2023. What we're seeing is a correction from the competitive pricing war lenders were running through late 2024 and into early 2025. Expect more of the same until swap rates stabilise. If inflation data comes in soft and the Bank signals cuts are back on the table, we could see rates ease again by Q2.