Proactive Investors - NatWest Group PLC (LON:NWG) has nudged up its mortgage rates, joining a small but growing group of lenders upping rates despite expectations that the Bank of England will cut the base rate next month.
The FTSE 100-listed bank announced that two-year and five-year fixed and tracker rate mortgages will increase by 0.3% later this week.
This follows Coventry Building Society and some smaller lenders raising mortgage rates on selected products in the past couple of weeks, after a period over the summer of almost universal cuts from banks and other mortgage providers in anticipation of the BoE bringing rates down.
But there has been a sharp rise in yields on gilts, which lenders use to price fixed-rate deals, with the 10-year government bond today paying 4.242%, up from around 3.75% in mid-September.
As well as reacting to volatile geopolitics, bond markets have been cautious ahead of the new Labour government's Budget, which is coming on 30 October and where a large increase in lending is expected.
The Bank of England's monetary policy committee is currently expected to cut the base rate to 4.75% from 5% at the 7 November meeting.
Justin Moy, managing director at broker EHF Mortgages, said the moves "were inevitable increases given how swap rates have increased over the past couple of weeks".
"Expectations of how the market will react to the 'painful' Labour Budget that is looming, coupled with nervousness around world oil prices increasing, makes for a tough narrative at the moment, and shows how sensitive our economy has become."
NatWest fixes move back up
NatWest lifted the rate on its five-year fixes back above 4%, having gone below this level in August.
The five-year rate will be 4.09%, up from 3.79%, for borrowers using a deposit of at least 40%, or to 4.19% from 3.89% for those with a smaller deposit.
Tracker rates are also being raised, with a two-year deal increasing to 5.91% from 5.61% for purchasers with a 40% deposit.