Coventry Building Society has “killed off any further hopes of a rate war” after raising mortgage rates, according to brokers.
Coventry Building Society is increasing selected residential rates, potentially following the ongoing uptick in swap rates.
This included increasing all fixed rates at 65 per cent-75 per cent LTV for new and existing borrowers.
Orchard Financial Advisers managing director, Ben Perks, argued this has dashed any further hopes of a rate war as, saying “more rises are on the way from big lenders”.
He added this development “feels like another setback for a property industry that has been hammered lately”.
Perks was not alone in this as Release Freedom director, Simon Bridgland, warned that other larger lenders are sure to follow with rate rises over the next week or two.
“With wholesale markets increasing costs to lenders, this is simply passed onto the nation’s borrowers,” he explained.
A similar sentiment was expressed by Lifetime Wealth Management mortgage and protection specialist, Katy Eatenton, who said: “Now that a bigger lender such as Coventry have hiked, more lenders will likely follow suit.”
While she expressed optimism that the increases will not be too dramatic, Eatenton cautioned that this could be a “symbolic turning point” for the mortgage market.
Factors
Lodestone Mortgages & Protection director, Craig Fish, suggested the increase could be due to world events.
“Due to the Middle East tensions we are now seeing lenders increasing rates following a spike in swap rates,” he explained.
“The world is a small place and unfortunately these increases mean smaller mortgages now being available, which will be a disappointment to many.”
Another factor was identified by John Charcol mortgage technical manager, Nicholas Mendes, who pointed to recent comments from BoE governor, Andrew Bailey.
Bailey indicated expectations for larger or more frequent rate reductions, which Mendes said has introduced “some uncertainty”.
“Various MPC members have expressed opposing views, signalling potential caution in future voting behaviour,” Mendes stated.
“Markets had been pricing in rate cuts for November and December, but expectations for December have softened slightly, reflecting this uncertainty.”
Additionally, The Mortgage Stop director, Rohit Kohli, said: “The downward trend in interest rates was never going to be a smooth slide down and there were always going to be bumps in the road.
“Coventry increasing this morning following the economic reaction to events in the Middle East was inevitable in some sense and will probably start the domino effect of other major lenders moving as well.
“Borrowers should be alert of today’s movement from Coventry and decide if the wait and see approach is right for them or if they need to lock in a rate now and remove the risk of increasing rates.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser
tom.dunstan@ft.com
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