Blink-and-you-miss-it mortgage deal: Co-op Bank attracts the best purchase rates three days after launch

The Co-operative Bank is withdrawing most of its market-leading mortgage rates just three days after launching them.

Since January 1, 44 lenders have reduced interest rates on products. But on Monday the Co-op blew the mortgage price war wide open with a number of best buy deals.

It cut rates on its two-, three- and five-year fixed-rate products by up to 1.07 percentage points, testing many lenders in their wake.

For a short period, new customers could secure a five-year fix, with rates from 3.84 percent and two-year fixed deals from 4.22 percent.

However, after just over three days of leading the market, the lender has pulled out.

The Cooperative issued a statement to mortgage brokers this afternoon saying: ‘On Thursday 11 January 2024 at 5pm we will temporarily withdraw the majority of our fixed rate products for new production.’

It said all its two-year, three-year and five-year fixed rate deals are being withdrawn for mortgages covering up to 85 percent of a property’s value.

However, it made no mention of the deals aimed at people who need mortgages covering more than 85 percent of a property’s value.

This means that the market-leading rates, reserved for those who buy or remortgage with 5 or 10 percent down payments or equity, should remain.

Those who buy with a 10 per cent deposit can get an interest rate of 4.02 per cent from Co-op if they fix for five years, or a rate of 4.8 per cent if they fix for two years.

Meanwhile, those with a 5 percent deposit or equity can get 4.48 percent on a five-year fix or 4.99 percent on a two-year fix.

Mortgage broker Chris Sykes suspects the Co-op Bank has been inundated with more applications than it can handle.

He says, “They offered the best rates on almost every loan appraised, whether that meant people buying with a 5 percent down payment or with a 40 percent down payment.

‘The people who transferred their mortgage also benefited from the best rates from the Co-op.

‘In fact, almost every inquiry we have made for residential customers has recommended the Co-op since these rates were released.

“The rates were just way too good, so they just got swamped.”

David Hollingworth, associate director of L&C Mortgages, says this shows that even if mortgage rates have fallen recently, borrowers would always be wise to act quickly to secure the best rates.

“This rapid pullback shows that while the market has improved, lenders cannot necessarily leave these deals open indefinitely,” Hollingworth says.

‘These are top rates, but they only last a few days. The quick withdrawal of these deals is likely a sign of how popular they have been.

‘The new year has started quickly and borrowers have clearly taken advantage of these rates quickly.

“Lenders will still need to manage the flow of business to ensure they can maintain service levels, and that will undoubtedly be a factor here.

He adds: ‘It does underline that these interest rates can come and go quickly and that swap rates are now going up slightly. There is no guarantee that lenders will continue to cut lower and lower.

‘There are other competitive options available for those who want to join now and I expect we will see other lenders looking to catch up with the market leaders.’

A spokesperson for the Co-op bank said: ‘We are continually reviewing our product range and due to increased demand, we have today made the decision to temporarily withdraw the majority of our fixed rate products from new contracts so that our teams work via existing applications.

‘Continue to maintain product switches for existing customers. Please visit our website for full details of these changes.”

What are the best deals now?

Thanks to a manic start to the year in which more than thirty mortgage providers have lowered interest rates. There are still plenty of rates below 4 percent.

According to Moneyfacts, the average five-year fixed mortgage is currently 5.29 percent, compared to the average two-year mortgage of 5.69 percent.

But there are offers that are much more competitive than these average rates.

The lowest rates offered are typically for homebuyers with the largest deposits and homeowners remortgaging with the largest amounts of equity.

We’ve looked at the best deals on the market based on a 25-year mortgage for a property priced at £290,000 – the current average house price in the UK according to the ONS.

To check current rates based on your own circumstances, please use This is Money’s mortgage finder and best buy tables.

Please note that the mortgage offers below are the best in terms of the lowest rate. They may not be the cheapest deal overall when package costs are also factored in.

The offers below are aimed at new customers. Existing customers may be able to obtain a cheaper rate by switching internally to a deal with their current lender.

Buy with larger deposit mortgages

Two-year fixed-rate mortgages

Barclays has a two-year fixed mortgage at 4.17 per cent with a fee of £899 at a loan-to-value of 60 per cent.

Halifax has a two-year fixed rate of 4.27 per cent with a fee of £1,099 at a loan-to-value of 60 per cent.

Five-year fixed-rate mortgages

Santander has a five-year fixed rate mortgage of 3.94 per cent with a fee of £999 at a loan-to-value of 60 per cent.

First Direct has a five-year fixed rate of 3.99 per cent with a fee of £490 at a loan-to-value of 60 per cent.

Mortgages with a fixed rate of 10 years

First Direct has a 10-year fixed rate of 3.99 per cent with a fee of £490 at a loan-to-value of 60 per cent.

Refinance with a higher equity

Two-year fixed-rate mortgages

Virgin Money has a two-year fixed interest rate of 4.34 per cent with a fee of £749 at a loan-to-value of 80 per cent.

TSB has a two-year fixed product at an interest rate of 4.44 per cent with a fee of £994 at a loan-to-value of 60 per cent.

Five-year fixed-rate mortgages

Santander has a five-year fixed rate of 3.89 per cent with a fee of £1,048 at a loan-to-value of 60 per cent. (Available from January 9)

Virgin Money has a five-year fixed rate of 3.89 per cent with a fee of £895 at a loan-to-value of 60 per cent.

Mortgages with a fixed rate of 10 years

HSBC has a 10-year fixed rate of 3.99 per cent with a fee of £999 on a loan-to-value of 60 per cent.