Five major lenders – NatWest, Barclays, Accord, Leeds Building Society and HSBC – have all announced rate increases so far this week, as concern grows that interest rates may not fall as rapidly as expected.

Swap rates have increased in the past week after US inflation came in higher than expected and economists appear to be divided about what this means for UK interest rates.  

John Charcol head of marketing Nicholas Mendes says: “Swaps increased at the end of last week following recent data announcements in the UK and US, with speculation building momentum of a delayed bank rate reduction being pushed out to August. This adds to the likelihood of two or three bank rate reductions this year diminishing.”

And Simon Gammon, managing partner at Knight Frank Finance, says: “This is bad news for borrowers that will undoubtedly take some of the momentum out of the recovery. The lenders were eager to avoid putting up rates, but they’ve been doing business at thin margins and rising swap rates have left them with little room to manoeuvre. 

“That said, these hikes are likely to be relatively small for the time being and should be followed by a period of stability until cuts to the base rate come into view. This means needs-based buyers will continue to dominate activity until mortgage rates begin falling more meaningfully again.”

Danny Belton, head of lending at the Mortgage Advice Bureau, adds: “We’ve become familiar with mortgage rates dropping, but rates are now creeping up again, with several lenders repricing this week. Swap rates have ticked up slightly on Bank of England interest rate expectations, and this is prompting a shift in the market. Prospective buyers and remortgagers shouldn’t panic, though.

“There are still deals to be had, and a handful of lenders holding rates or pricing down. If you’re buying for the first time or your mortgage is coming to an end in the next few months, your best bet is to speak to a broker, who can access the most suitable deals for your financial circumstances and get you mortgage ready.”