This is the second time that the lender has increased rates in days
High street lender NatWest has announced mortgage product withdrawals and rate increases, effective immediately.
The bank said the changes, which apply to products up to 90% loan-to-value (LTV), were made to simplify its mortgage range. Its purchase products at 95% LTV will still be offered.
Withdrawn are two- and five-year fixes for purchase and remortgages at 60%, 80%, and 85% LTV, and the bank will have only tracker deals available.
NatWest has also increased the rates of two- and five-year fixes for purchase and remortgages at 75% LTV, now with either a £995 fee or no fee.
Read more about Natwest Mortgage Rates for Remortgage in this article.
The lender has already increased rates on new and existing customer product ranges days ago, with significant buy-to-let rate increases of up to 1.57%.
Current mortgage market volatility has forced many lenders to pull their products since the latter part of May. According to data from financial information company Moneyfacts, nearly 10% of mortgages had been taken off the market last weekend due to concerns about increasing interest rates. The figures indicated that approximately 800 residential and buy-to-let deals had been withdrawn, and average rates on two- and five-year fixed deals had also risen.
The data firm also revealed that the average two-year-fixed-rate mortgage had increased from 5.49% to 5.86% while the average five-year deal had risen from 5.17% to 5.51% since the beginning of June.
The move from the lenders, experts say, is due to the financial markets reaction to the stubbornly high inflation data, which has changed expectations of how far the Bank of England will have to raise interest rates.
“The rise in mortgage rates and mortgages being pulled by lenders due to inflation figures being stronger than expected is unwelcome news for homeowners, especially first-time buyers and those coming to the end of an existing deal,” commented David Hannah, chairman at Cornerstone Group International. “This is being done in anticipation of an expected rise in interest rates which will cause borrowers more issues when looking to purchase a property.
“We are already seeing record levels of unaffordability in the UK property market and lenders such as NatWest and Nationwide withdrawing mortgage deals is only going to further exacerbate the situation for potential buyers in the property market.”
Meanwhile, the Intermediary Mortgage Lenders Association (IMLA) advised borrowers who found themselves in difficulty to contact their lender to discuss their options.
“The mortgage rules already require lenders to adopt a number of ‘forbearance’ measures to help borrowers in difficulty,” IMLA said. “Detailed communication between lenders and borrowers is crucial, because each borrower’s circumstances will be different, and the most appropriate solution will also need to be tailored on an individual basis.
“For those who need help most, there are options available. Expert advice from intermediaries has a huge role to play here, and lenders can offer a variety of solutions which are specific to individual circumstances. As an industry, we need to avoid fuelling sensational headlines and knee-jerk reactions – and concentrate on focusing practical help where it is needed most.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.
