Nikka Sulton

Mortgage borrowers are facing higher costs as several major lenders increase their fixed-rate deals.

Santander, Nationwide and HSBC UK are all raising mortgage rates across various parts of their ranges, with some products increasing by as much as 45 basis points.

The changes come as lenders face higher funding costs, putting further pressure on borrowers who are looking to secure a new mortgage or refinance an existing one.

Santander Makes Significant Increases

Santander has increased mortgage rates by up to 45 basis points, with the changes taking effect on Wednesday.

Aaron Strutt, product and communications director at Trinity Financial, described the scale of the increase as a potential shock for customers.

He noted that Santander was increasing its two-year fixed rates by 0.45% and five-year fixes by 0.4%, adding that it was unusual to see so many major lenders increase rates at the same time.

The changes also mean Santander has effectively removed its remaining mortgage products priced below 5%.

For first-time buyers, the lender’s 90% loan-to-value (LTV) two- and three-year fixed-rate deal with no fee and £250 cashback has risen by 45 basis points to 5.8%.

Its 95% LTV two-year fixed-rate product, also offering £250 cashback, has increased to 6.05%.

Buy-to-let borrowers are also affected. Santander has raised rates across its BTL range by between 40 and 45 basis points.

Its five-year fixed-rate BTL mortgage with no fee has increased by 40 basis points to 5.51%.

Nationwide Raises Rates Across Its Range

Nationwide is also increasing rates across a number of its mortgage products.

The changes affect first-time buyers, home movers, remortgage customers and borrowers looking to switch or take additional borrowing.

Fixed mortgage rates are set to increase by as much as 30 basis points.

Strutt said lenders are facing greater pressure when funding mortgages as the cost of borrowing increases.

Nationwide’s first-time buyer rates will now range from 4.64% to 5.74%, while some remortgage products are moving closer to the 6% mark.

For borrowers already facing higher refinancing costs, the changes could make it more expensive to replace an existing fixed-rate mortgage when their current deal ends.

HSBC Also Increases Mortgage Pricing

HSBC UK is making a broad set of mortgage rate increases from 15 September.

The changes cover residential mortgages for first-time buyers, home movers and customers looking to remortgage.

All two-year and five-year fixed-rate products, along with two-year tracker mortgages, are being increased across the lender’s LTV bands.

The changes also apply to HSBC’s Premier, High Value Mortgage and energy-efficient product ranges.

Buy-to-let borrowers will see increases too.

HSBC is raising rates on two-year and five-year fixed BTL mortgages, as well as two-year tracker products for both purchases and remortgages. The changes apply across all LTV bands and include Premier, £3,999-fee and energy-efficient mortgage products.

Existing customers looking to borrow more or transfer to a new product will also face higher rates.

Funding Costs Continue to Put Pressure on Rates

The latest increases highlight the wider pressures facing mortgage lenders.

When wholesale and borrowing costs rise, lenders can respond by increasing the rates offered to new and existing customers.

The changes from Santander, Nationwide and HSBC mean borrowers now have fewer opportunities to secure some of the lower mortgage rates that were available previously.

This could be particularly important for homeowners approaching the end of a fixed-rate period, as well as landlords refinancing buy-to-let mortgages.

What Does This Mean for Borrowers and Landlords?

Higher mortgage rates can have a direct impact on monthly repayments and the overall cost of borrowing.

For landlords, increased BTL financing costs could put further pressure on rental property profits, particularly where rents cannot be increased enough to offset higher mortgage and operating expenses.

Homeowners and buyers may also need to reassess affordability as mortgage rates rise.

With several major lenders changing their pricing at the same time, borrowers may want to compare available deals and consider securing a rate early if they are approaching a remortgage or purchase.

The latest moves also suggest that mortgage pricing remains sensitive to changes in funding costs, meaning borrowers should not assume that rates will continue to fall in the near term.