Nationwide is the latest lender to increase its mortgage rates as brokers warn we may be seeing the back of falling rates.

Providers are upping rates or pulling cut price deals off the market altogether in response to rising swap rates and an increase in demand.

Swap rates are used by banks and building societies to predict the path of the base rate in the future and is the yardstick by which they lend money to each other. When they are higher, lenders push mortgage rates up so they can maintain a profit.

The increase in swap rates is based on the expectation the Bank of England will continue to increase the base rate at its next meeting next month with financial markets suggesting it will be a 0.5 percentage points increase – moving the base rate from 4 to 4.5 per cent.

David Hollingworth of brokers L&C said: “Rather than falling further it now looks as though fixed rates have hit the bottom and are even bouncing a little higher in some cases.”

In response, Nationwide is hiking fixed and tracker mortgages, effective from today (3 March), saying it needs to ensure its pricing remains ‘sustainable’.

It is increasing selected two and five-year fixed rates and two-year tracker rates by between 0.05 and 0.21 per cent.

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It’s five-year fixed rate for first-time buyers with a 40 per cent deposit will now sit at 4.24 per cent, an increase of 0.1 per cent.

Meanwhile, its five year fixed rate remortgage deal with a 40 per cent deposit is now 4.19 per cent, an increase of 0.2 per cent.

Henry Jordan, Director of Home at Nationwide Building Society, said: “Given the recent increase in swap rates, we are having to make some small increases on selected mortgage rates this week so that we can continue to balance our support for all types of borrowers with the need to ensure our rates remain sustainable.”

HSBC was one of the first to up its prices this week, increasing rates on variable, buy to let, re-mortgage and fixed rates. Standard variable rates for homeowners are rising from 6.79 to 6.99 per cent while buy-to-let variable rates are increasing to 6.85 per cent from 6.35 per cent.

Its leading five-year fixed rate for re-mortgages is also increasing from 3.94 to 3.99 per cent tomorrow for those with a 40 per cent deposit and a £999 fee.

Other providers are pulling products altogether, most likely due to oversubscription. Platform, which launched a market leading five-year fixed deal for 3.75 per cent, withdrew it within 72 hours.

Luke Thompson, Director at PAB Wealth Management, said: “Swap rates have been on the increase over the past 7 to 10 days and this is what has been driving recent increases in the cost of mortgage borrowing.

“Nationwide are a big player in the market so if they are increasing rates, there is a good chance other lenders may follow them.”

Experts are suggesting those looking to re-mortgage may want to consider locking in a deal now or alternatively going for a short term fixed deal which means they can move to a cheaper offer more quickly in the future.

A tracker rate mortgage could also be an alternative as they follow the base rate.

Speaking to a broker will be the best course of action to decide what is best for you, experts recommend.

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