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TSB Increase Fixed rates by up to 0.75%

Journalist: Justin Moy, Contributing Editor

ended 24. April 2024

TSB are the latest lender to increase their Fixed Rates, with some rates up to 0.75% higher for Shared ownership deals.

We have asked the Newspage Mortgage Brokers about these rate changes, why the rate increases are higher than other lenders, and will this encourage other lenders to increase again.

 

10 responses from the Newspage community

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Editor
Ken James
Director at Contractor Mortgage Services
As lenders scramble for safety, the mortgage landscape appears increasingly grim. With swap rates on the rise, lenders are transparent about their need for profit margins, prompting them to hike up their rates accordingly. The significant uptick in rates for shared ownership mortgages suggests that TSB is distancing itself from this sector, leaving aspiring homeowners with even fewer options. While TSB may be the latest target of criticism, they are not alone in seeking refuge in lifeboats, as more lenders follow suit. The mortgage market is once again thrown into turmoil, echoing past upheavals.
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Justin Moy
Managing Director at EHF Mortgages
Significant increases across the board from TSB, with the highest increase for those looking to buy Shared Ownership properties. Without Help to Buy, Shared Ownership has become the go-to scheme for affordable housing, so to make those specific mortgage deals less affordable is somewhat contradictory, but with these rate hikes it is inevitable that other lenders will follow the TSB, and we just see more of the market shut down and suffer.
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Tracey Dixon
Owner/Broker at Pure Mortgage and Protection
There are several possible reasons why TSB has increased its rates more than other lenders:

Elevated Funding Costs: TSB may face heightened expenses in accessing the funds they lend out. This could stem from factors such as intensified competition for funds in the market.
Perception of Shared Ownership Risk: TSB might perceive shared ownership mortgages as carrying increased risk. This perception could arise from potential economic downturns or uncertainties within the shared ownership market.
Strategic Decision-making: It's conceivable that TSB is strategically raising rates to target specific borrower segments or deter applications deemed too risky.

In assessing whether other lenders will follow suit, it remains premature to draw definitive conclusions. Observing the market's response and whether other lenders encounter similar pressures will provide clarity moving forward.
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Rohit Kohli
Director at The Mortgage Stop
Such a sharp increase from TSB will have taken many borrowers by surprise. Lenders are adjusting to shifting expectations on what the Bank of England will do and with the recent mixed economic data and messages the optimism of cuts in interest rates as early as next month is dwindling rapidly.
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Darryl Dhoffer
Founder at The Mortgage Geezer
TSB following the lead with other lenders that have increased their rates last week, clearly shows they do not want to be over exposed in the mortgage application stakes - uncertainty still surrounds the mortgage rate market.
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Dariusz Karpowicz
Director at Albion Financial Advice
TSB's recent hike in fixed rates by up to 0.75%, especially for shared ownership deals, is notably steep compared to other major lenders. This substantial increase prompts speculation about what might be looming on the economic horizon. Given this move, there's a real possibility that other lenders could follow suit, adjusting their rates upwards in response to similar pressures. This could signal a trend where borrowing costs continue to rise, affecting affordability and access to housing finance.
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Simon Bridgland
Director at Charwin Private Clients
It looks like TSB have gone off in a new business tail spin, hopefully its not a sign of things to come, but the reaction from their competitors will become evident pretty quickly with further increases expected this week, so no telling where things will end up.
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Gary Bush
Financial Adviser at MortgageShop.com
Wow is all I can say about TSB's latest fixed rate mortgage increases up to .75% for Shared Ownership - the very device that is fuelling the UK's first-time-buyer market at the moment. To see this sudden attack from this ex-Lloyds Banking Group arm against the lifeboat property purchase scheme that new borrowers are clinging to does seem an unnecessary act when the risk to lenders by Shared Ownership is much lower than normal borrowing.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
The withdrawal of trackers seems to be quite telling. Clearly with base rate cuts predicted at some point, TSB don't want customers on a tracker rate that all of a sudden becomes unprofitable when base rate drops. In that context this seems a bit of a 'we don't want to take on too much new business until we know what the heck is going on with base rate' and how to price accordingly. Don't forget lenders margins on mortgages really aren't that high and they have to act accordingly.
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Richard Jennings CeMAP
Founder & Managing Director at Richard Jennings Mortgage Services
Rate increases are becoming the new normal yet again, though to see rates risen by 0.75% in one re price is a huge shock.

We have seen other lenders re price lately between 0.1 to 0.3 so such a re price by TSB here seems completely out of line with the rest of the market.

Those clients holding out for lower rates a couple of months ago may now be left with remorse as they face a period of much higher rates than they could have obtained. A further indication of do what is right for you at the time and don't try to play the markets as there is too much volatility and uncertainty.