finance news

UK: Retail bank NatWest hikes mortgage rates by more than 1%

UK: Retail bank NatWest hikes mortgage rates by more than 1%

British retail and commercial bank, NatWest, has reportedly raised its interest rates on mortgage products following last week’s turmoil in the market, becoming the last of the big banks in the country to do so.

According to reports, the banks had to take corrective measures like these after the market turbulence, triggered by growing concern over the UK government’s mini budget, created difficulties for them to price their home loans in an accurate manner.

The move, which was rather unusual for the lender, shattered the hopes of new and existing homeowners to secure loans with under 4% interest rate. The bank issued a notice to brokers on Sunday, notifying them of the increase in rates of several mortgages following a rise in demand.

The rates which previously lay between 3% to 4% will be increased to between 4% to 6% from Monday, 3rd October, coming in line with the lender’s competitors.

It was reported that the bank was struggling to keep up with the spike in applications after mortgage lending was temporarily suspended by its rivals last week.

By Thursday last week, the inability of the banks to accurately price their respective home loans due to the market turbulence led to the removal of 40% of mortgage products from the market.

In its note to brokers, NatWest stated that while it remained in the market, the current market conditions have caused the bank to implement widespread changes to its product range.

Usually, lenders do not keep rates lower than their rivals in order to avoid excess applications.

Nicholas Mendes, Mortgage Technical Manager, John Charcol, stated that NatWest was one of the only few to not make any sudden changes. However, the changes in the market became too volatile for the bank to stay still as time went on.

Mendes commented that it would have been ‘rather brave’ of NatWest, which is still owned 48% by the government, to remain in the market with unchanged rates, adding that lenders often do not let brokers down unless circumstances demand quick action.

A spokesperson for the bank stated that NatWest has kept its products under continual review aligned with market circumstances.

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