Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Major Lenders Raise Mortgage Rates as Swap Rates Climb
Major UK lenders have increased mortgage rates to reflect recent rises in swap rates, according to analysis from Moneyfactscompare.co.uk. HSBC and NatWest are among the largest banks to have raised rates since the start of this month, with more lenders expected to review their mortgage rates in the coming days.
The adjustments come as lenders seek to ensure their rates remain aligned with market conditions. Earlier this year, in late February, the biggest high street banks—including Barclays, HSBC, Lloyds Bank, NatWest, and Santander—priced their lowest rate deals around 0.29% above the two-year swap rate.
Since the start of this month, only a small number of lenders, such as Family Building Society, have withdrawn fixed rate mortgages from sale, likely as a temporary measure. This is a notable contrast to March 2026, when many lenders rapidly withdrew products in response to soaring swap rates linked to conflict in the Middle East.
A 0.25% increase on a typical two-year fixed rate mortgage would add approximately £38 to monthly repayments, or £456 per year, based on a rate rising from 5.63% to 5.88% for a £250,000 loan over 25 years.
Moneyfactscompare.co.uk noted that pricing margins among major lenders are under pressure due to renewed volatility in the swap rate market. The recent uplift in swap rates has started to influence the pricing of fixed rate mortgages, with further changes expected soon. Swap rates are currently much higher than a month ago and are a key factor in how lenders price fixed-rate mortgages.
The report also highlights that the recent impact on the mortgage market is less severe than during the initial conflict in the Middle East six months ago, when many lenders withdrew fixed rate deals. The current pressure on swap rates has not been caused by UK fiscal policy, and the scale of withdrawals and rate hikes is not as significant as after the 2022 'mini-Budget.'
Borrowers hoping for a drop in mortgage rates in the coming weeks may be disappointed, according to the analysis. Economists suggest that any potential increase to the Bank of England Base Rate may not occur until November.
Source: Mortgage Strategy