There have been more modest rate increases announced by lenders, as nerves continue to be stretched over broader economic issues.

Yesterday the long-term cost of government borrowing reached its highest level since 1998.

The 30-year gilt yield, which is the interest rate demanded by investors, rose more than five basis points yesterday morning – pushing the rate to the highest this century, and the highest in the G7. On the currency markets, the pound also fell more than 1% against the dollar on Tuesday morning.

So lenders have reacted and Barclays has announced rate increases of 0.1% on selected best buy products.

Its premier two-year fixed at 60% loan-to-value (LTV) with a product fee of £899 has increased from 3.74% to 3.84% while the two-year fixed at 60% LTV with a product fee of £899 has risen from 3.75% to 3.85%.

Both products have a minimum loan of £5k and a maximum loan of £2m. 

The lender has also increased rates on remortgage only and purchase and remortgage products. 

So the remortgage Great Escape five-year fixed at 60% LTV with no fee is now 4.18% from 4.08% – there are minimum £50,000 and maximum £2m loan limits. 

In the purchase and remortgage range, the five-year fixed at 70% LTV with a fee of £1,999 has been lifted from 3.97% to 4.07%. This has a minimum loan of £2m and a maximum loan of £10m. 

Meanwhile Principality Intermediaries has made rate changes in both directions for different products.

Its two-year fixed residential products at 80% LTV with no fee has been lowered by 0.27% while three-year fixes at 85% LTV have gone down by 0.25%. 

The residential with cashback two-year fixed at 80% LTV product has been cut by 0.26% while the two-year fixed at 85% LTV product has gone down by 0.23%. In the joint borrower sole proprietor range, the two-year fixed 75% LTV product has been reduced by 0.15%.

But the lender has also made rate increases of up to 0.13%.

In Principality’s residential range, two-year fixed products at 65% LTV have gone up by 0.11% while five-year fixed products with a fee of £1,395 have risen by 0.13%.

Buy-to-let prices have also been increased with fixed-year fixed products at 60% LTV going up by as much as 0.07% and 70% LTV products going up by as much as 0.05%; and holiday let two- and five-year fixed products at 60% LTV have also increased.

On the macro front, Susannah Streeter – head of money and markets at Hargreaves Lansdown – says warning lights are flashing about increasingly tricky economic conditions and geopolitical risk. 

She says: “Gold prices have jumped again, to new record levels, as the fallout from President Trump’s radical trade policy continues to unnerve investors, pushing them towards safer havens. Although spot gold has retreated after breaching £3508 an ounce, it remains highly elevated, as concerns continue to swirl about the impact of tariffs. Investors also appear rattled by Trump’s attempts to interfere with the running of the Federal Reserve, and the disputed sacking of Fed Governor Cook. An independent US central bank is seen as crucial for the US to maintain credible monetary policy management and so the President’s actions are shaking confidence

“Bond markets have put Rachel Reeves on a report card at the start of term. The UK Chancellor is facing highly difficult choices in the upcoming Budget, and she’s been dealt a warning by gilt investors. They are selling off UK government debt, clearly concerned that the government may be losing its grip on the public finances. This is reflected in the rise in 30-year UK gilt yields which hit 5.71%, highs not seen since 1998. With so many options for raising taxes being bandied about during the summer, there appears to be concern that the decisions made might not be sufficiently thought through. 

“The worry isn’t just that government coffers won’t be replenished, but that they will be filled at the expense of growth, leading to a vicious circle emerging.

“Inflationary pressures remain a political challenge. The annual inflation rate in the Eurozone has edged up to 2.1% in August, the highest level in four months, with food prices climbing 5.5%. Households are still having to deal with concerning cost-of-living increases. This is making it more difficult to rein in public spending at a time when people are already feeling the pinch. A confidence vote in France is now looming, over plans for a fresh round of austerity, with the potential for political instability at the heart of Europe.

“Geopolitical risk remains high, with new relationships being forged as the US turns old trading friends into new potential foes, and Russia remains incalcitrant over attempts to deliver a ceasefire in Ukraine. These continuing tensions are showing up in the oil price, with Brent Crude rising 2% towards $70 a barrel, levels not seen in almost a month.  This is likely to add to concerns about stubborn inflation, although forecasts for lower demand in the global economy due to trade tensions will keep a lid on prices to some extent.’’

Victoria Clarke, UK chief economist at Santander, says: “We have revised our UK interest rate view and now expect Bank Rate to remain at 4% through end-2026, rather than falling to 3.5% by April 2026 as in our previous forecast.”