Homebuyers are being urged to brace themselves “for a bumpy ride” as mortgage interest rates climb once again. NatWest has announced it will increase mortgage rates by a further 0.28%, prompting warnings of potential 6% rates by the end of April.

Swap rates, the sum a lender agrees to pay a financial institution in exchange for funds, have risen by approximately 4.15% to 4.70% since the onset of the Iran conflict. This has already had an impact on mortgage rates which have surged sharply over recent weeks.

The rise is a consequence of fears that inflation will escalate as a result of the higher price of oil. Brent crude reached $115 per barrel on Monday, which will translate into higher energy and fuel costs, reports the Mirror.

Experts have cautioned that if the conflict in the Middle East is not resolved as quickly as possible, then mortgage rates could continue rising. with 6% mortgages are now a genuine possibility, Newspage reports.

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said: “A disappointing but not unexpected start to the week, as Swap markets and lenders react to the ongoing conflict, which shows no immediate resolution.”

“As oil and inflationary pressures mount, this 0.28% increase across the board is likely to be replicated by most major lenders this week. There is a real chance that rates will push closer to 6% by the end of April if we see no improvement in the Middle East over the coming weeks.”

The last time average UK mortgage rates breached the 6% threshold was in October 2022, the highest level since 2008 following the market upheaval after the mini-budget. Two-year fixed rates surpassed 6% on 5 October 2022, reaching nearly 6.65% later that month, having stood at 2.34% in December 2021.

However, Shaun Sturgess, Director at Swansea-based Sturgess Mortgage Solutions, said it may present an opportunity for first-time buyers to negotiate a lower price. He added: “It’s starting to feel like the war in the Middle East is not going to be over quickly and lenders are now pricing in the risk of entrenched inflation due to the soaring oil price and higher interest rates.”

Other experts have warned 6% mortgages are now a real possibility, Newspage reports. Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said: “Trump has single-handedly turned the entire UK mortgage and property market on its head and rates could continue to deteriorate in April. This is not the start to the week borrowers had been hoping for. Equally it is an opportunity for first-time buyers to negotiate very hard as they hold all the cards right now.”

Adam Stiles, Managing Director at London-based Helix Financial Partners, stated lenders are relentlessly raising rates. He added: “NatWest increasing by a large margin is concerning as we aren’t seeing any slowing down in rate increases from lenders – they’re coming in thick and fast.”

“While we originally thought the large increases were to weather the volatility, the volatility is so large that these sizeable rate increases are becoming more and more regular. We need stability and we need it now.”

Samuel Mather-Holgate, Managing Director and IFA at Swindon-based Mather and Murray Financial, said it would be a “tough” summer. He said: “As more uncertainty drips through from the Middle East as Trump suggests boots on the ground are the next step in the conflict, rates continue to tick up in the mortgage market.

“The expectation of higher oil prices and rising inflation means lenders are hiking rates in anticipation of the Bank of England doing so to try and curb inflation, as they did after Russia invaded Ukraine. It looks like it is going to be a tough summer for the housing market.”

Michelle Lawson, Director at Fareham-based Lawson Financial, said: “A new week and the mortgage mayhem and onslaught of rate rises continues to add to the misery here in the UK. The knock-on of the Middle East crisis continues and shows little signs of easing. Buckle in for a bumpy ride for the foreseeable future.”