UK Bond Market Selloff Fuels Mortgage Rate Spike

The UK's bond market selloff is affecting mortgage pricing, causing borrowers to face higher rates. HSBC, Halifax, and BM Mortgages have re-priced parts of their residential and buy-to-let ranges in response to the gilt market turmoil.

Rohit Kohli, Director at The Mortgage Stop, says that 'this is being driven by the bond markets.' Gilts and swaps are negatively impacting borrowers, and the Bank of England has yet to intervene this week. Sub-4% fixes have already disappeared from the market, and brokers expect the 5% line to be tested next.

Craig Fish, Director at Lodestone Mortgages, notes that borrowers with large deposits or equity can still find 2- and 5-year fixes around 4.5% to 4.6%, but this window is narrowing. Swap rates will decide the next move, and they appear spooked.

Matthew Ryan, Head of Market Strategy at Ebury, says that 'UK gilt markets are doing much of the heavy lifting.' Sovereign bond yields globally have risen in recent weeks, and gilts have been no exception. The 30-year yield has reached its highest level since 1998, and the ten-year yield is at a 19-year high near 5.40%.