Nationwide increases mortgage rates by up to 0.2%: "Beginning of the end of low rates"

NATIONWIDE has announced rate increases of up to 0.2% on mortgages as brokers warned that this can be the “beginning of the end of low rates”.

The bank is raising rates across first-time buyer, homemover, remortgage and Product Transfer deals, it announced today.

Two year deals start from 3.87% for homemovers with a 40% deposit and a £1,495 product fee.

Mortgage brokers and financial advisors said this will likely mean the Bank of England (BoE) will not go lower with its base rate.

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages commented: “When Nationwide announces changes to their mortgage range, the market listens. Though increases of up to 0.2% are not a disaster for borrowers, this does put everyone on notice that perhaps we have seen the bottom of the cheapest deals for now. 

"Borrowers should scramble to book a new deal or remortgage via their broker as soon as possible.”

Katy Eatenton, Mortgage & Protection Specialist at St Albans-based Lifetime Wealth Management, said the move signalled that rates are now set to rise.

She added: "Nationwide is the latest of the main lenders to announce rate increases, which confirms this is the beginning of the end of the super low rates.

“This indicates we are unlikely to see any movement to the base rate at the next meeting of the Bank of England (BoE).”

Cameron Scott, Broker at Archie John Financial, said other banks will now raise their rates.

He said: “Nationwide increasing fixed rates by up to 0.2% although not catastrophic reflects the uncertainty around inflation and future rate cuts, I wouldn't be surprised to see similar lenders follow suit in the short term.”

Ben Perks, Managing Director at Stourbridge-based Orchard Financial Advisers, said it's a “bump in the road”.

He said: “Nationwide are a major player and when they increase their rates others tend to follow. Looks like another bump in the road to recovery for the mortgage market.”

Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, added: "Nationwide nudging up rates is not the news borrowers want to see. With inflation stubborn and the chances of another rate cut this year reducing, rates may well have bottomed out for now. 

“But as ever, in the mortgage market things can turn on a dime. Countless economic datasets can feed into mortgage rates and then will be plenty in the weeks ahead, starting with retail sales tomorrow.”

Elliott Culley, Director at Hayling Island-based Switch Mortgage Finance, said uncertainty is leading to rate increases.

He continued: "Nationwide increasing their rates keeps them in line with other lenders who have upped rates recently due to the rise in swap rates. 

“There is uncertainty on the economy and inflation has been creeping up. This has laid the foundations for a period of uncertainty where we may see further increases in the market.”