TSB puts up fixed mortgage rates, removing cheapest deals on market

TSB has today upped rates across a number of its fixed term mortgage deals, including some best buys.

The bank has hiked rates across its two-year and three year fixed products, aimed at both home buyers and those remortgaging, by 0.2 percentage points.

Most notably, it increased the rate on its two-year fix aimed at home buyers purchasing property with at least a 40 per cent deposit (60 per cent loan-to-value).

Its cheapest two-year fixed rate has increased by 0.2 percentage points from 5.09 per cent to 5.29 per cent, with a £995 fee. This was previously the cheapest two-year fix on the market. 

The new market-leading two-year fix is now offered by Santander which charges 5.14 per cent, with a £999 fee. 

For those buying with at least a 25 per cent deposit (75 per cent loan-to-value), the rate has risen from 5.14 per cent to 5.34 per cent.

Its market leading remortgage deals have been pulled as well.

Previously borrowers could secure a rate of 5.19 per cent when remortgaging to TSB’s cheapest two-year fix, as long as they had at least 40 per cent equity.

Those remortgaging with between 25 per cent and 40 per cent equity within their homes (75 per cent loan-to-value) can now get 5.44 per cent with TSB, up from 5.24 per cent.

Will other lenders put up their mortgage rates?

Mortgage rates have been heading down over the past couple of months, so TSB’s announcement goes against the tide.

Yesterday, Santander cut its rates following the likes of Nationwide and Halifax that cut rates earlier this month.

However, rather than being a sign of things to come across the mortgage market, brokers believe this is likely to be a one-off with some of TSB’s deals proving simply too popular for the bank to handle.

Nicholas Mendes, mortgage technical manager at John Charcol says: ‘TSB by all accounts had a market leading two-year fix by some distance.

‘When we consider Nationwide and Barclays two-year fixed on remortgages, and Virgin and Leeds Building Society on purchases there was a significant margin between competitors pricing and TSB.

‘TSB will have bitten more than they can chew, and the latest rates increase is to be more in line with competitors. This was always on the cards and no doubt to also reduce the impact on service levels.

Chris Sykes, associate director at broker Private Finance adds: ‘This is just due to demand. 

‘They’ve been inundated with business as their rates were market leading in lots of circumstances and this is unsustainable so they are putting themselves in a more average rate position.’