The UK housing market has recently witnessed a new wave of mortgage rate increases, with five major banks in the country announcing rate hikes all on the same day. NatWest, Santander, HSBC, Lloyds Bank, and TSB simultaneously raised their mortgage rates.
Concerns About Future Rates
This increase in rates comes at a time when concerns about the future direction of inflation and interest rates have reached a peak. Experts predict that there may be five base rate hikes on the agenda by the end of next year. Santander, in particular, has announced significant increases, raising two-year rates by up to 0.45% and five-year rates by up to 0.4% starting tomorrow.
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Aaron Strat from mortgage broker Trinity Financial says, "I can't remember the last time five out of six major lenders raised their rates in one day." He added that this change in rates could be shocking for customers checking rates today and tomorrow.
Consequences of Rate Increases
The increase in mortgage rates will have serious consequences, especially for households currently on fixed rates below 3%. According to estimates, since the beginning of March 2026, the average fixed two-year mortgage rate has increased by 0.89%. For a £250,000 mortgage repaid over 25 years, this increase has added an average of £131 to monthly payments.
This situation could be challenging for households whose fixed rates are expiring, particularly those with rates between 1% and 2%. Many of these households may face new rates around 5%. For example, a household with a £250,000 mortgage at a 5% rate may have to pay £1,462 monthly, which is £462 more than when their rate was 1.5%.
Additionally, given the recent increase in SONIA rates, this situation appears to be worsening for households. These rates are influenced by long-term market forecasts for Bank of England rates and economic conditions. This increase in rates could mean further increases in mortgage rates in the future.
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