TSB has informed brokers that it will be increasing selected mortgage rates across its offering, as well as withdrawing a number of existing products.
Effective from tomorrow, Thursday 25th April, the lender will be withdrawing all of its 2-year tracker first-time buyer, home mover and remortgage products.
In addition, it will be increasing rates on 2-, 3-, and 5-year first-time buyer, home mover and remortgage products by up to 0.35%.
It’s Shared Ownership and Shared Equity offering will also see increases of up to 0.75%.
In TSB’s buy-to-let range, its 2-year tracker for house purchase and remortgages, and its 2- and 5-year fixed house purchase and remortgage products with zero fee will all be withdrawn from market.
The lender is also increasing rates on its 2- and 5-year fixed house purchase and remortgage offering by up to 0.45%.
TSB has urged brokers to submit applications for existing products by the end of today, Wednesday 24th April.
Reaction:
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.”
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.”
Tracey Dixon, 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.”
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.”
Darryl Dhoffer, adviser at The Mortgage Expert:
“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.”
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.”
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.”
Richard Jennings CeMAP, founder and 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 reprice 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.”
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.”
Simon Bridgland, broker and director at Release Freedom:
“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.”
The Intermediary has reached out to TSB for comment.
