Rate cut needed ‘sooner rather than later’ as mortgage pricing rises - warning

Increasing numbers of mortgage lenders are pulling decent deals as swap rates rise.

Santander has become the latest high street lender to raise mortgage pricing this week after offering some of the lowest-priced deals in recent weeks, including rates below 4%.

This may dent some of the positivity in the market that has buoyed buyer demand recently.

Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, told the Newspage agency: “2024 started brilliantly with many rates in the low 4%s and even starting with a 3 for most high street lenders at lower loan to values. 

“However, not even two months in and market confidence is diminishing rapidly. There needs to be a base rate reduction sooner rather than later to change the current course, which is ominous at best.”

Mark Robinson, managing director at Albion Forest Mortgages, added: “Rates can increase for many reasons, whether due to shifting swap rates, which have been rising in recent weeks, or to control the number of applications they receive. 

“If lenders don't control their application input levels, they can easily become overwhelmed and their service levels will quickly fall. But this highlights why people cannot become complacent that rates will continue to fall, and that the road ahead is set to be bumpy.”

It comes as Bank of England Governor Andrew Bailey told MPs on the Treasury Select Committee yesterday that it is “not unreasonable” for the markets to expect interest rate cuts this year.

But he said it depends on the progress of services prices, wage growth and the labour market.