Gilt Turmoil Reaches Households: Lenders Start Raising Fixed Rates
Coventry Building Society became the first notable lender to tell brokers it will raise fixed-rate mortgage deals from Monday, for new and existing borrowers, after the week’s jump in swap rates — with others expected to follow. Average new fixes already stand at 5.59% for two years and 5.63% for five; the 15-year gilt yields that drive annuity rates hit 28-year highs this week. The jump “does not bode well for borrowers,” said Moneyfacts’ Rachel Springall.
This is the week the bond story stopped being about the Chancellor and started being about kitchen tables: swap rates — the wholesale prices lenders hedge with — moved days ago, and Coventry’s Monday repricing is simply the first retail acknowledgement, with the rest of the market’s pricing committees now covered by precedent. The comparison that matters is 2022: the reaction so far is smaller and slower than the mini-Budget spiral, because this squeeze is global rather than a UK-specific credibility failure — but the direction is identical and the Bank’s chief economist spent Thursday arguing rates should rise further. The one cohort quietly gaining: annuity buyers, whose incomes price off exactly the long yields punishing everyone else. Watch Monday’s repricing breadth — one lender is a signal; five is a market move.