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Lenders react to base rate change

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Written by: Shekina Tuahene
17/06/2022
The Bank of England hiked its Bank Rate to 1.25% this week - its highest level in 13 years
Lenders react to base rate change

Mortgage lenders have yet again made changes to product rates in light of the increased Bank of England (BoE) base rate.

On Thursday, the Monetary Policy Committee (MPC) decided to increase the base rate from one per cent to 1.25 per cent as a means to curb inflation. Many lenders responded to the announcement by raising rates.

Nationwide

Nationwide will increase rates on its trackers products to reflect the base rate from 1 August.

It said it was “working through” what the change means for its variable reversion rates, Base Mortgage Rate and Standard Mortgage Rate, noting that it previously rose both to reflect the BoE’s May decision. At the time, these went up by 0.25 per cent each to three per cent and 4.49 per cent respectively.

HSBC

HSBC’s tracker mortgages will see rate rises to reflect the 1.25 per cent base rate. Its residential and buy-to-let standard variable rates (SVRs) will remain unchanged.

Earlier this week and ahead of the rate rise, HSBC increased a number of two, three and five-year fixes between 60 and 95 per cent loan to value (LTV) for new and existing residential and buy-to-let borrowers.

Santander

All Santander’s tracker mortgages linked to the base rate will rise by 0.25 per cent from the beginning of July. The bank’s follow-on rate will increase to 4.5 per cent.

Mortgage products linked to the base rate issued by its subsidiary Alliance and Leicester will also see a 0.25 per cent uplift which will come into effect in the beginning of August.

Both brands’ SVRs will rise to 5.49 per cent from August.

Skipton BS

Skipton Building Society has decided not to increase its SVR or mortgage variable rate. Despite the base rate rising by one per cent over time, the mutual has only increased its variable rates by 0.25 per cent since.

A Skipton Building Society spokeswoman said: “For our borrowers, the society will not be increasing its MVR or SVR, meaning for the bulk of mortgage customers – those not on base rate tracker linked products – there will be no increases to their payments as a direct result of today’s bank base rate announcement.”

The mutual will also withdraw its base rate-linked tracker products on 19 June, to replace them with repriced alternatives on 20 June to reflect the rate change.

Leeds BS

Leeds Building Society made the decision to hold its SVR, which is currently 5.54 per cent for standard mortgages and 5.84 per cent for buy-to-let products.

Richard Fearon, chief executive at Leeds Building Society, said: “We work hard to balance the needs of our membership as a whole, whether savers or borrowers. So to support our borrowers, we’ve again agreed not to increase our standard variable rate following today’s MPC announcement.”

Aldermore

For Aldermore borrowers with mortgages linked to the base rate, pricing will rise by 0.25 per cent from 1 July for existing borrowers and 21 June for new business.

Its SVR, otherwise known as the Aldermore Managed Rate, will increase to 5.73 per cent from 1 July for existing customers and from 23 June for new borrowers.

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