Lenders repricing in response to escalating Iran conflict

The ongoing Middle East conflict, escalating uncertainty and a subsequent spike in oil prices, have caused lenders to reprice this week, with mortgage rates increasing for Santander, Halifax, HSBC and Barclays, and more likely to follow.

Santander has announced the biggest increase so far, with an increase of up to 0.3% across its new business range, as well as the launch of new products. Barclays has increased rates by up to 0.20% across its residential and remortgage ranges, with its Existing Mortgage Customer (EMC) Reward two-year fixed, £1,999 fee, 70% Loan to Value (LTV) rate rising from 4.76% to 4.96%.

Halifax has introduced homemover and first-time buyer rate increases of up to 0.20% on all two, three and five-year fixed rates. Meanwhile, HSBC is also increasing rates across its residential and Buy to Let (BTL) mortgage rates and more lenders are expected to do the same this week.

Sharp rise in swap rates

Hina Bhudia, partner at Knight Frank Finance, said the moves had followed a period of stability for the market. “Up until the end of last week, the market had been relatively calm, with borrowers benefiting from a range of competitively priced tracker and fixed rate products.

“However, a sharp rise in swap rates, driven by heightened geo-political tensions and the escalating conflict in Iran, has prompted lenders to reprice. In some cases, the increases are significant, highlighting how quickly uncertainty in global markets can feed through to mortgage pricing.”

Katy Eatenton, mortgage and protection specialist at Eatenton Finance, said: “The mortgage price war ended just as quickly as the ceasefire. Those borrowers who were waiting for rates to get lower gambled and many will have lost.

Ben Perks, managing director at Orchard Financial Advisers, said: “As long as war rages, mortgage rates will be turbulent.”