Nationwide, HSBC and Coventry Building Society are among lenders nudging up mortgage rates as hopes of more Bank of England interest rate cuts were dampened by the conflict.
David Hollingworth, associate director at L&C Mortgages, does not expect rates to spiral quickly but suggested that borrowers mulling taking out a new fixed-rate deal should try to get it “sooner rather than later”.
London’s FTSE 100 Index slumped 1.6% lower at one stage before closing about 130 points, or 1.2%, lower at 10,284.75 on Friday.
Mortgage rates are rising
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Declines were compounded by heavy falls on Wall Street, with the S&P 500 and Dow Jones indexes down about 1.1% after European markets had closed.
Amid the economic fall-out of the US and Israel airstrikes on Iran, Chancellor Rachel Reeves held emergency talks earlier this week with oil and gas chiefs in No11 amid warnings that energy bills could sky-rocket by £150.
In a blow to homeowners, Nationwide announced rate changes on Friday for mortgages of between two and ten years.
They include for first time buyers, up to 95% LTV, increases of between 0.14% and 0.25%, for new and existing customers moving home, up to 95% LTV, rises of between 0.07% and 0.25%, and remortgages up to 85% LTV going up by between 0.08% and 0.15%.
A Nationwide spokesperson said: “Like other lenders, we are having to increase rates following a significant rise in swap rates as a result of recent global events.”
HSBC has raised rates for new customers by between 0.10% and 0.25% and for existing customers by between 0.04% and 0.13%.
The Coventry Building Society told its borrowers that rates are going up, with details to be announced on Monday.
Chancellor Rachel Reeves speaking to oil and gas chiefs in No11 Downing Street
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“Mortgage pricing is closely linked to swap rates, and as these have moved in recent days we’ve had to adjust some of our mortgage rates too,” said a spokesman for the building society.
Meanwhile, Qatar’s energy minister warned that the war could “bring down the economies of the world”, predicting a widespread shutdown of Gulf energy exports that could send oil to 150 dollars (£113) a barrel.
Saad al-Kaabi told the Financial Times that even if the war ended immediately, it could take “weeks to months” to resume normal exports after an Iranian drone strike on Qatar’s largest liquefied natural gas plant earlier in the war.
Workers evacuate area around Saudi Aramco’s Ras Tanura oil refinery as smoke rises following a reported Iranian drone strike
via REUTERS
The price of Brent crude oil was rising on Friday to surpass 88 US dollars (£66) a barrel, its highest price since April 2024.
This means it has jumped by about 21% over the past week, slightly above the weekly gain recorded during March 2022, when prices rocketed in the aftermath of Russia’s invasion of Ukraine.
Prior to that, Brent crude oil prices shot up by around 23% in May 2020.
If the gains hold through to the end of the day, when markets close, then it would mark the biggest weekly increase since the Covid-19 pandemic.
Worries about disruption to shipping routes constricting supply of the commodity have sent wholesale prices soaring through the week.
The Joint Maritime Information Centre said few tankers were passing through the Strait of Hormuz
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The Joint Maritime Information Centre, which provides reports to shipping companies, said there was a “near-total temporary pause” in traffic through the Strait of Hormuz with only two confirmed commercial transits observed in the previous 24 hours.
Shipping firms are reacting to a combination of security threats, insurance constraints, operational uncertainty and disruption rather than a “declared blockade”, it said.
The Strait of Hormuz is a vital shipping route that transports about a fifth of the world’s oil and gas supplies.
Iran has threatened to target ships going through it.
