TSB mortgage rates cut by up to 0.10% as brokers hail "good news" for borrowers

TSB mortgage rates are being cut by up to 0.10% from tomorrow (Thursday 22 October), as experts tell Newspage it is “finally, a bit of good news” for borrowers.

The cuts apply to two-, three- and five-year fixed-rate house purchase mortgages. Selected remortgage products will also see reductions, with a 0.05% cut on two-year fixed-rate deals.

The move comes as UK inflation rose to 3.5% in the 12 months to September, up from 3.1% in August, according to the Office for National Statistics (ONS). 

The increase was driven by a surge in petrol and diesel prices, just a week before the Budget on 28 October.

Mike Staton, Director at Mansfield-based Staton Mortgages, welcomed TSB’s latest mortgage rate cuts as a positive step for borrowers.

He said: “Finally, a bit of good news for mortgage borrowers, although let's not start celebrating just yet. A 0.10% reduction is hardly going to transform anyone's finances, but at least TSB is moving in the right direction.

“The frustrating thing is that lenders are perfectly capable of competing and reducing rates, but the economic uncertainty hanging over this country continues to make life unnecessarily difficult for homeowners.

“Borrowers deserve better than the constant uncertainty they've been subjected to. TSB deserves credit for making a positive move, but let's not confuse a lender fighting for business with an economy that's suddenly finding its feet.”

Harry Goodliffe, Director at Winchester-based HTG Mortgages, believes TSB is competing for a shrinking pool of buyers ahead of the Budget.

He commented: "Let’s not mistake 0.10% for the market turning. TSB has adjusted purchase rates more than remortgage ones, and that tells you exactly where the business has dried up.

“Buyers have stopped buying while they wait to see what next week’s Budget does to them, so TSB, with targets to hit, are knocking a bit off to tempt the handful still looking to purchase. With inflation rising and the Bank of England more likely to raise than cut, this is TSB fighting over a small number of purchase applications. I would bet on more small cuts like this before the Budget."

Michelle Lawson, Director at Fareham-based Lawson Financial, said the cut was small but still welcome for borrowers.

She commented: "Whilst this is only a hair's breadth, something is better than nothing at the moment. Swaps, Gilts and SONIA are still rising so there is no real stability other than a small boon for borrowers. This could be a bit of market adjustment ahead of the Budget and nothing to get excited about for long-term prospects but it all pays for something.”

Craig Fish, Director at London-based Lodestone Mortgages, warned the cuts could be wiped if the Budget pushed swap rates higher.

He commented: "TSB trimming rates by up to 0.10% is welcome, but let’s not get carried away. These are marginal cuts. Swap rates have been edging up, so this has nothing to do with cheaper money filtering through. Lenders have year-end targets to hit and are shaving their margins to win business, and Leeds Building Society and Accord are doing exactly the same.

“Borrowers should see it for what it is: lenders chasing volume, not a turning point. The timing could hardly be more awkward. Inflation has just jumped to 3.5%, its highest in almost a year, and the Budget lands next week. Either could push swap rates higher and wipe these reductions out within a matter of days.

“A 10th of a per cent won’t save anyone from a nasty surprise next Wednesday. If your fix ends in the next six months, secure a deal now and keep reviewing it right up until completion. Lenders are cutting because they need your business, not because the outlook has got any brighter. Never gamble with the biggest debt of your life."