Barclays and HSBC customers could be around £288 worse off | Personal Finance | Finance

Home buyers face fresh mortgage misery as Barclays becomes the latest high street bank to hike rates – adding an average of 0.2% across its fixed-rate range.

The rise, which mirrors increases brought in by HSBC, will heap further pressure on already-stretched household budgets.

It comes just hours after NatWest took borrowers by surprise by cutting some of its fixed deals by as much as 0.23%, fuelling confusion in a market that experts say is growing increasingly erratic.

For homeowners taking out a new £200,000 mortgage, a 0.2% rate hike would mean paying around £24 more a month, or around £288 a year, based on a standard 25-year repayment mortgage.

Harry Goodliffe, Director at HTG Mortgages, warned: “We’re definitely seeing the sub-4% deals slip away, and fast. Barclays and HSBC hiking rates feels like a mix of reacting to rising funding costs and not wanting to be overwhelmed with demand.”

Others echoed the sentiment that lenders are playing a dangerous game of pricing leapfrog – each trying to avoid being the most attractive option to borrowers, lest they become flooded with applications.

Katy Eatenton, of Lifetime Wealth Management, told Newspage: “It really is a minefield with lenders at the moment. NatWest and Nationwide have reduced recently, which is more likely to attract business than due to external market data.”

Meanwhile, Elliott Culley, of Switch Mortgage Finance, suggested the shake-up is more to do with internal targets than broader market conditions.

He said: “Lenders have targets and it’s likely NatWest are reducing their rates to help them meet them.

“Meanwhile, we are seeing HSBC and Barclays increase rates as they have been pricing closer to the top in recent weeks and it’s likely they want to reduce their business levels for the time being.”

Justin Moy, of EHF Mortgages, warned that the inconsistent approach from lenders was edging into dangerous territory, saying: “This is a real mixed bag, with mortgage lenders typically increasing rates, such as Barclays and HSBC, while NatWest flexes its muscles out of state ownership with rate cuts due later in the week.”

With hundreds of thousands of fixed-rate deals set to expire later this year, the uncertainty leaves many borrowers in limbo.

Jack Tutton, of SJ Mortgages, said: “The mortgage market roller-coaster continues, making it very difficult for consumers to decide what to do. This comes at a time when so many people’s mortgage deals are ending before the end of the year.

“Barclays have held their rates a lot longer than others so their increases come as no real surprise, however NatWest’s decreases are interesting as it comes off the back of them making several increases recently.

“Lenders are having to strike a balance between their work loads, competitivity and the cost of funding, which is making it very difficult for consumers to decide on the best way forward.”

Pete Mugleston, of Online Mortgage Advisor, added: “It looks like the rate war we had over the past few months has ground to a halt. Instead, we may now be entering a period where lenders tinker around the edges rather than make broad and eye-catching cuts.”

Aaron Strutt, of Trinity Financial, warned the days of ultra-cheap deals may be numbered, saying: “Some borrowers still believe we are in a rate-cutting environment where mortgages are getting cheaper, but this is generally not the case.

“There are still some decent fixes and tracker options available now, but there are certainly fewer three and five-year fixes priced around 3.99%.

“While the cost of funding does seem to have stabilised, it would not be a surprise to see more lenders pushing up their prices over the coming days.”