- TSB has increased the two- and three-year fixes by 0.2 percentage points
- The bank’s best deals no longer exist with brokers saying they have proven too popular
TSB today increased rates on a number of its fixed-term mortgage deals, including some best buys.
The bank has increased the interest rate for its two- and three-year products, aimed at both home buyers and refinancers, by 0.2 percentage points.
Most notably, it increased the interest rate on its two-year fix, aimed at homebuyers purchasing properties with at least a 40 percent down payment (60 percent Loan-to-Value).
A different direction: TSB has implemented interest rate increases on its two- and three-year products, aimed at both homebuyers and refinancing mortgages by 0.2 percentage points
The cheapest fixed rate with a two-year term has risen by 0.2 percentage points from 5.09 per cent to 5.29 per cent, with a fee of £995. This was previously the cheapest two-year solution on the market.
The new market-leading two-year solution is now offered by Santander, which charges 5.14 percent, with a fee of £999.
For those purchasing with at least a 25 percent down payment (75 percent loan-to-value), the rate has increased from 5.14 percent to 5.34 percent.
The market-leading remortgage deals have also been withdrawn.
Previously, borrowers could receive an interest rate of 5.19 percent if they renewed their mortgage under TSB’s cheapest two-year fixed rate period, as long as they had at least 40 percent equity.
Those taking out a new mortgage with between 25 and 40 per cent equity (75 per cent loan to value) can now get 5.44 per cent with TSB, up from 5.24 per cent.
Will other lenders increase their mortgage rates?
Mortgage rates have fallen in recent months, so TSB’s announcement goes against the grain.
Yesterday, Santander cut its rates, following the likes of Nationwide and Halifax who cut rates earlier this month.
But rather than being a sign of what’s to come in the mortgage market, brokers believe this is likely to be a one-off as some of TSB’s deals simply prove too popular for the bank.
Nicholas Mendes, mortgage technical manager at John Charcol, said: “TSB had a market-leading two-year solution by some distance in every respect.
‘Looking at the two-year commitment of Nationwide and Barclays on remortgages, and Virgin and Leeds Building Society on purchases, there was a significant margin between competitors’ and TSB’s prices.
‘TSB will have bitten off more than they can chew, and the latest rate increase will be more in line with the competition. This was always planned and undoubtedly also to reduce the impact on service levels.
Chris Sykes, associate director at private finance broker, adds: ‘This is purely due to demand.
“They have been swamped with business because their rates have been market leading in many circumstances and this is unsustainable, so they are putting themselves in a more average rate position.”