Home buyers have been thrown into confusion with leading finance giants split on changes to mortgage rates.
Barclays has announced reductions of 0.2 of a percentage point across a number of new home loans, however Santander has pushed up the cost of several new deals by 0.18 percent.
The future path of interest rates has been thrown into the air by the impact of changes in the October budget and Donald Trump’s election in the USA.
Both of these events have brought predictions that both inflation and interest rates will be higher over the next 12 months than was previously forecast.
As a result, the Bank of England has signalled that cuts in the base rate will be slower and smaller, while so-called swap rates, which set the interest charged by finance giants to lend to one another have also ticked upwards.
UK mortgage brokers said the mixed messages offered by Barclays and Santander makes like difficult for those looking to buy in the run up to Christmas.
Michelle Lawson, Director at Lawson Financial, said: “Welcome to mortgage market mayhem.
“Santander’s announcement to raise rates after Barclays cut them earlier on Tuesday shows the radical flux in the mortgage market at present. Rates are going here, there and everywhere. The volatility shows that borrowers need to act and secure a rate and then let brokers monitor their mortgage for rate reductions.”
Ben Perks, Managing Director at Orchard Financial Advisers, said: “This is such a turbulent and unpredictable time for mortgage rates. The hope Barclays gave has been cruelly snatched away by Santande.”
Director at Exemplar Financial Services, Iain Swatton, said: “Barclays cutting rates in the morning and Santander hiking theirs in the afternoon is the mortgage market equivalent of someone pouring you a cup of tea, only for the next person to take the biscuit away.
“While Barclays might be signalling optimism, Santander seems to be managing its popularity a little too well. For consumers, though, it’s a bewildering picture: are rates going up, down, or just playing a game of musical chairs?
“One thing’s for sure—navigating this market is as much about timing as it is about luck.”
The situation is further confused by suspicions that some banks are taking advantage of interest volatility to boost their profits by increasing the cost of borrowing or mortgages, loans, credit cards and overdrafts while at the same time cutting returns to people with savings.
Justin Moy, Managing Director at EHF Mortgages, said: “One high street lender cuts fixed rates, another increases them not long after.
“This may reflect several factors, such as whether a lender is looking for business or perhaps turning the taps off to catch up on slower admin. Ultimately it’s a mixed message to borrowers who will be confused by such announcements, and just shows the true value of using a mortgage broker, as timing can be so important to secure the best rates. If Ken Dodd did mortgages…”
And Rohit Kohli, Director at The Mortgage Stop, said: “This is what happens when there’s uncertainty and zero growth plans from the government.
“ A chaotic combination of volatility and vagueness is forcing lenders to pull in different directions, leaving borrowers baffled. Rate cuts from some and hikes from others are creating a rollercoaster of confusion, and this is unlikely to stop anytime soon. Until the government delivers clear, growth-driven leadership, stability will remain out of reach.”
Elliott Culley, Director at Switch Mortgage Finance, said: “Santander have been more competitive in the market recently, so this increase will be in response to this and wanting to move out of the spotlight for a while so as to not affect service levels.”
Ken James, Director at Contractor Mortgage Services, said: “Charles Dickens would love all this, it’s like scrooge has come early.Barclays have opted for the lets give them what the need and ease the rates, Santander on the other hand have decided no presents under the tree this year kids, lets hike them rates up.
“It is a very topsy turvy kind of market extremely difficult for brokers to read never mind prospective buyers and sellers.”
