Major banks announce consecutive interest rate hikes, warning they’re “not small”

12 November 2024 , 18:14

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Major banks announce consecutive interest rate hikes, warning they’re “not small”

A string of big lenders have announced interest rate hikes one after the other - as the mortgage market takes a turn for the worse.

HSBC, Santander, Nationwide, TSB and Virgin have all announced hikes today and in recent days.

It follows a budget that analysts fear could prove to be inflationary.

There is concern extra costs for businesses, such as the minimum wage uplift and the national insurance rise, could be passed on to consumers.

Last week the Bank of England cut the base rate to 4.75% but struck a cautious note, saying further rate cuts would be "gradual" - prompting markets to further scale back forecasts for another cut in December.

High street lenders have been gradually lowering their rates for months in anticipation of repeated base rate cuts.

Now, they seem to be readjusting.

Hina Bhudia, partner at Knight Frank Finance, said: "It often takes one large lender to prompt a broader shift in mortgage pricing and announcements of rate hikes are now coming thick and fast. 

"The outlook for interest rates has changed and the market needs to reprice as a result. 

"The moves we’re seeing aren’t small either - often about 0.3%, which will be enough to suppress housing market activity as we move towards the end of the year. 

"We’ll need a real and enduring change in the inflation outlook for mortgage rates to begin falling again, which means the recovery is on pause for now."

Elizabeth Baker