Coventry Building Society has confirmed it is increasing interest rates across its line of mortgage products in a blow to prospective homebuyers.
In recent months, high street lenders have been slashing rates in what has been referred to as a “mortgage price war” ahead of an expected base rate cut from the Bank of England later this year.
However, the building society appears to be bucking this trend on select products ahead of other major financial institutions.
Interest rates have been raised by banks and building societies following the central bank’s decision to hike the base rate.
The Bank’s Monetary Policy Committee (MPC) previously voted to raise rates to a 16-year high of 5.25 per cent in reaction to inflationary pressures.
After the consumer price index (CPI) eased closer to MPC members’ desired target of two per cent, the Committee narrowly voted to bring the base rate down to five per cent.
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The building society is raising mortgage rates
COVENTRY BUILDING SOCIETY
Analysts are pricing in another interest rate from the Bank of England by the end of year but Coventry Building Society’s latest move has provoked concern.
Ahead of the Autumn Budget on October 30, Chancellor Rachel Reeves has cited the new Labour Government’s intention to hike allowed borrowing limits.
On top of this, concerns over a potential widespread war in the Middle East and US election anxiety has led to greater nervousness in the market.
Coventry Building Society is increasing selected residential rates, potentially following the ongoing uptick in swap rates.
Notably, the high street lender is raising all fixed rates at 65 per cent-75 per cent LTV for new and existing borrowers.
Speaking to Newspage, mortgage brokers gave insight into Coventry Building Society’s thinking.
Iain Swatton, the director at Exemplar Financial Services, explained: “The Coventry’s decision to raise residential mortgage rates signals that global tensions, particularly in the Middle East, are starting to affect the market.
“Combined with ongoing uncertainty in the UK economy, this move is a clear warning that other lenders may follow suit in the coming days. Just as confidence was beginning to return, these rate hikes could put pressure on borrowers waiting for the right time. If you’ve been holding off, now might be the time to act before conditions tighten further.”
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The central bank previously raised interest rates to a 16-year-high GETTY
Adam Stiles, the managing director at Helix Financial Partners, added: “The great mortgage rollercoaster continues its ride with Coventry now increasing rates.
“SWAP rates have risen sharply this week, possibly spooked by the rumour mill and rhetoric coming out of the Treasury for the upcoming Budget, the conflict in the Middle East, and unexpected economic data released in the US recently.
“Time will always tell with these things but for now, we don’t expect to see many lenders decreasing rates any further for the time being on certain products.”
The Bank of England’s next MPC meeting will take place on November 7,2024.