Four major banks including Nationwide and Barclays have increased their mortgage rates, dealing a significant blow to borrowers. Virgin Money and Co-operative Bank have also raised rates, with the changes taking effect on Thursday.
Rate increases across the board
Nationwide and Virgin Money have both increased mortgage rates by up to 0.35 percentage points, described as a 'brutal blow for borrowers'. Barclays was the first to change course, upping rates by as much as 0.37 percentage points. These increases come after a period of falling rates in June, which had raised hopes of improved affordability in the housing market.
Economic impact and expert views
Liam Daly, an economist at the Centre for Economics and Business Research, said: 'After mortgage rates fell notably in June, there was growing optimism that a sustained period of relative stability in the Middle East would reduce the risk of interest rates hikes, and that falling mortgage rates would gradually restore some affordability and activity in the UK housing market.' He added that with the conflict 'appearing to enter a new intensified phase, the momentum is again shifting in a negative direction'.
Jack Tutton, director at SJ Mortgages, commented: 'The amount of some of the increases that lenders are making are significant. It strikes me that they feel that rates could be increasing for a while to come. Despite mortgage rates reducing on a consistent basis since the peace deal was struck a month ago, this has all been undone in a matter of days and it will not be long until the rest of the market starts to follow.'
Market reaction and borrower advice
Lewis Shaw, a broker at Shaw Financial Services, said: 'This will sap what little confidence was creeping back into the housing market.' A Barclays spokesperson said: 'We regularly review our mortgage rates for customers and have recently made a number of updates to our range. While many remain unchanged, some rates have increased and others have decreased.'
Ian Futcher, a financial planner at Quilter, added: 'Recent mortgage rate increases risk taking some momentum out of the housing market just as confidence had started to improve.' Nicholas Mendes of John Charcol brokers said: 'Rates remain well below where they were during the spike earlier this year, and the market has shown throughout 2026 that when conditions settle, lenders are quick to pass falling costs back to borrowers.' He added: 'Products can typically be reserved up to six months before completion, and if pricing improves in the meantime, most lenders will allow a switch to the cheaper deal.'
