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TSB increases residential rates by up to 0.30%

Journalist: Newspage, Newspage Mortgage Admin

ended 21. February 2024

TSB has just announced increases to their Homebuyer range of mortgage products and some remortgage deals, up by 0.30% depending on the product. Newspage asked brokers for their views on this repricing, how it fits with  current market conditions and whether it will slow down the recent uplift in mortgage activity? Their views are below.

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11 responses from the Newspage community

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Over the past few weeks more of the banks and building societies have been raising their mortgage rates, but for the moment they are still reasonably priced. Two-year fixes start from 4.4% and five-year fixes are priced around 4.2%. HSBC still has a sub-4% five-year fix but it is unlikely to be around for long. Lenders had a cracking start to the year and the property market has really picked up. These rate hikes may well start to knock the property sector again if they continue, though.
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We are seeing a very slight uptick in rates across the main high street lenders as they adjust for the various factors that affect their overheads. However, overall rates are quite stable, and a lot lower than they were two months ago. People shouldn't panic, as rates go up and down all the time. As long as the overall trend is a downward one over time, that is the thing to focus on.
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It’s like a domino effect at the moment. Lenders are waiting for each other to make a move and when one finally does, the others follow. This was in some ways inevitable: the road to recovery is rarely smooth so these increases are hopefully short lived and that the downward trend resumes again in the coming weeks.
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This trend of mortgage rates being adjusted upwards seems to unrelenting right now. Many are hopeful that the Chancellor will take steps to stimulate the property market with his spring Budget, potentially influencing mortgage rates and market dynamics in the coming months.
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It seems as though the dominos are starting to fall, with one lender after another increasing rates. First Santander, then Coventry and now TSB. As swap rates rise, the cost of funding fixed rate mortgages increases and shows up as lenders repricing upwards so we may see a few more large lenders follow suit in the coming days.
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TSB are now the latest lender to adjust their fixed rate pricing following on from Santander and Coventry. This seems to be a widespread market adjustment and more lenders will likely follow. The outlook is more positive though, with gilt yields normalising for the moment, indicating that it is less likely that lenders will hike rates even further.
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Unfortunately, TSB are just one of many lenders forced to increase rates given recent increases in Swap rates, pouring some cold water onto the property and mortgage market, for the short term at least. Perhaps this will allow a few lenders to catch up with their outstanding application numbers, ready for the inevitable drop in rates we hopefully will see soon.
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2024 started so well and looked like the UK fixed rate mortgage market was going to calm down with rate decreases all lining up nicely. Lenders are now all following their competitors like lemmings with TSB the latest lender to introduce notable increases to their rates. It's tragic news for the first-time buyers who came fresh out of the new year blocks with plans to finally get on the property ladder. The horizon looks to be less rosy for the next couple of weeks, until the March Bank of England monetary policy committee meeting, which will inevitably bring a base rate hold or if we all pray to our respective idols even a marginal .25% decrease. All analytical eyes are on this situation to try and wrestle some sanity from the past 20 months.
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With swap rates increasing in January, it's no surprise that lenders are having to reprice. With lenders looking to keep their rates and margins competitive, any slight changes to swap rates are going to mean fluctuations. This is not something to overly worry about as we are going to see these type of fluctuations all year until there are some very positve steps with inflation and the Bank of England base rate.
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TSB were sourcing at the top on 5-year fixed products so this is probably partially due to not wanting an influx of applications and also erring on the side of caution while swap rates are so volatile. Either way it’s not looking good for borrowers now.
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No real surprises with another high street lender reacting to swap rate volatility and increasing their rates to reflect rises witnessed across the rest of the market over the past few weeks. Fixed rates under 4% are quickly becoming a thing of the recent past, however rates are now likely to stabilise in the immediate future, until more positive inflation numbers start to make their impact, which may trigger some rate reductions. Nevertheless, it's not great news for borrowers right now, and shows how volatile the market is.