Rising swap rates force NatWest to increase 5-year fixed rates

NatWest Intermediary Solutions, Royal Bank of Scotland’s intermediary brand, has been forced into increasing the rates on some of its five-year fixed rates as a result of rising swap rates.

Five year swaps, which are used to price five-year fixed rate mortgages, have risen sharply in in recent months. Since the end of April five-year swaps have jumped from 0.93 per cent to around 1.91 per cent on 13 September.

The lender is increasing a 60 per cent LTV five-year fix from 3.09 per cent to 3.35 (with no product fee) while the same five-year deal with a £995 fee has increased to 3.05 per cent from 2.79. The final increase is on a 75 per cent LTV deal with a £995 product fee, which is now 26 basis points higher at 3.35 per cent.

NatWest Intermediary Solutions head of sales Mark Bullard says although some of the changes announced today were made with a view to managing the lenders business portfolio, it was also responding to market forces.

Bullard says: “Five year swap rates have trended upwards for a number of months now. We have managed to resist reflecting these increases in our product rates for some time but the reality is that funding has increased so we have had to make changes to the rates on some of our five year deals.”

While it has increased some of its five-year fixed rates, the lender has reduced a number of two-year fixes, including a five basis point reduction to a new low rate of 2.18 per cent for borrowers with a deposit of 30 per cent or more.

NatWest is cutting a 75 per cent LTV product by 0.05 per cent to 2.35 and for borrowers with a 15 per cent deposit the new rate is 3.35 per cent, down from 3.49. All of these products carry a £995 fee.

A new first-time buyer deal is available with a two-year fix offered at 4.49 per cent and no product fee, offered up to 90 per cent LTV.

Bullard says: “We have continued to actively support intermediaries in offering mortgages for first-time buyers. This new deal means we have a choice of two and five year fixed rate mortgages in the 80, 85 and 90 per cent LTV bands that are exclusively for first-time buyers.”