NatWest raises mortgage rates in line with its rivals

Lender takes unusual move of issuing notice to brokers on Sunday, saying it was increasing its rates

The government-backed lender NatWest has become the last big bank to raise interest rates on its mortgage products after last week’s market turmoil, dashing homeowners’ hopes of securing loans with rates lower than 4%.

In an unusual move for a high street lender, NatWest issued a notice to brokers on Sunday morning, saying it was increasing rates on a swathe of mortgages following a surge in demand.

Most of its rates, which previously hovered around 3-4%, are set to rise to between 4% and 6% from Monday, bringing it in line with its competitors.

It is understood that the bank had been struggling to keep up with a surge in applications after rivals temporarily suspended mortgage lending last week. The market turbulence – sparked by concern over the government’s mini-budget – made it difficult for banks to price their home loans accurately, resulting in 40% of mortgage products being pulled from the market by Thursday.

NatWest said in its note to brokers: “We’ve remained in the market, but with market conditions as they are we need to implement widespread changes to our product range.”

Lenders tend to avoid leaving rates lower than their competitors, amid fears they will be flooded with applications. It is understood that NatWest was fielding five times as many calls as normal last week.

Nicholas Mendes, of the mortgage broker John Charcol, said: “NatWest was one of the few lenders who hadn’t made any sudden changes. As a result, they have clearly felt the changes in the market are too volatile to remain still.”

He said it would have been “rather brave” of the bank – which is still 48% owned by the taxpayer after its financial crisis-era bailout – to stay in the market without changing rates. “Lenders don’t often like to let brokers down unless circumstances call for quick action. Releasing updates or changes over the weekend unfortunately means there will be clients waking up to a change of terms or even lenders as they look for a more competitive term.”

Mendes added: “This acts as a reminder that you cannot take anything for granted, and ensuring if you want to secure a rate making sure an application is made to the lender as quickly as possible.”

A NatWest spokesperson said the bank kept all of its products “under continual review in line with market conditions”.

Contributor

Kalyeena Makortoff Banking correspondent

The GuardianTramp

Related Content

Article image
HSBC and NatWest cut mortgage rates again as rivals tipped to follow
Decision will ease some pressure on UK homebuyers and people seeking remortgage deals

Rupert Jones

04, Sep, 2023 @5:46 PM

Article image
UK mortgage turmoil: Santander pulls new borrower deals as NatWest hikes rates
Move follows decision by HSBC and applies to brokers and online applications as lenders hike fixed rates

Rupert Jones

12, Jun, 2023 @11:44 AM

Article image
UK banks urged to ‘accelerate’ savings rates by financial regulator
FCA tells NatWest, Lloyds, HSBC and Barclays to act more quickly to support consumers after profiteering claims

Kalyeena Makortoff Banking correspondent

06, Jul, 2023 @5:16 PM

Article image
NatWest and Virgin Money cut rates as mortgage ‘price war’ spreads
Big lenders become latest to reduce borrowing costs, joining four other UK home loan providers this week

Rupert Jones

10, Aug, 2023 @5:28 PM

Article image
UK mortgage approvals rise despite surge in borrowing rates
Surprise jump in demand for home loans as borrowers ‘scramble’ to get ahead of interest rate increases

Larry Elliott Economics editor

31, Jul, 2023 @11:04 AM

Article image
Bank of England raises UK interest rates to 4%
Hike of 0.5 percentage points lifts rates to 14-year high, but BoE says shorter and shallower recession now more likely

Phillip Inman

02, Feb, 2023 @4:51 PM

Article image
Are big banks short-changing consumers by failing to reduce mortgage costs?
UK high street banks are accused of not passing on benefits of money market movements to savers and borrowers

Rupert Jones

01, Dec, 2022 @3:47 PM

Article image
City watchdog asks banks how they will support mortgage borrowers
Talks held between FCA and lenders over concern millions could struggle to afford higher payments

Kalyeena Makortoff Banking correspondent

30, Sep, 2022 @1:24 PM

Article image
UK ‘mortgage meltdown’ looms amid ‘terrifying’ growth in arrears
Jump in borrowers unable to make payments with landlords particularly hit and ‘worse to come’

Phillip Inman

12, Sep, 2023 @2:45 PM

Article image
Hope for homebuyers as rates fall on UK fixed mortgage deals
Small drops in average rates for two- and five-year fixed mortgages follow easing of inflation rate in June

Rupert Jones

20, Jul, 2023 @12:10 PM