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Sub-4% deals axed as TSB, Santander and HSBC hike mortgage rates

Sub-4% deals axed as TSB, Santander and HSBC hike mortgage rates
Matt Browning
Written By:
Matt Browning
Posted:
22/02/2024
Updated:
23/02/2024

Deals for residential mortgages priced under 4% could soon be a thing of the past after a flurry of high-profile lenders increased their rates again.

The current increases across major lenders, challenger banks, and mutuals alike mark the end of the long-running rate cuts covered by YourMoney.com in its ‘mortgage wars’ series.

If follows the latest data from Rightmove, which shows the average five-year fixed rate is now priced at 5.72%, marking a jump from 4.69% a week ago. Its two-year version rose from 4.97% to 5.08% last week.

Last week several big banks upped their rates and we’ve rounded up even more increases set to hit borrowers.

Santander kicked off the increases by announcing fresh prices across the residential and buy-to-let (BTL) mortgages in its business range. All standard residential fixed rates shot up by between 0.23% and 0.34%.

The lender increased all BTL fixed rates in its business range by a similar amount (between 0.23% and 0.33%).

A smaller rise hit its product transfer range, with fixed rates popping up to 0.2%, whereas BTL fixes have risen by up to 0.15%. It means rates with the lender start at 4.6%.

TSB and HSBC mortgage rate hikes

TSB joined the lender in going north with its mortgage rates, increasing first-time buyer, five-year fixed, and home-mover rates by up to 0.3%, with the lowest prices standing at 4.49%.

The two-year fixed remortgage rates up to 75% loan to value (LTV) increased by 0.2%, and the five-year equivalent is up by 0.3%. Prices with the lender start at 4.84% and 4.44% respectively.

NatWest also announced price hikes of up to 0.15% on purchase, remortgage, first-time buyer, and switcher products. There will also be a slightly smaller surge in price for its greener home and help to buy deals of up to 0.10%. Both rate rises will be effective from 23 February.

It’s a move mirrored by HSBC, which completes the quartet of big banks bumping up their rates in its BTL mortgage product ranges. A huge raft of increases including two-, three-, five- and 10-year fixed rates will all happen, covering deals that finance up to 60% to 90% of borrowers’ properties.

The re-price also means the last of the sub-4% deals are expected to be withdrawn from the market.

Latest round of rises ‘was inevitable’

Following the trend of providers adding swathes of rate increases, Nicholas Mendes, mortgage technical manager at John Charcol, said: “HSBC’s latest reprice was inevitable following competitor movements in recent days.

“I expect we will have a few weeks of mortgage rates adjustments, as lenders will be busy balancing margin and volume to ensure this latest hiccup in rates doesn’t dampen the new year demand.”

Mendes added: “Sub-4% deals will be off the cards temporarily, but once some positive data feeds back into the market confidence, pricing will slowly edge back down.”

David Hollingworth, associate director at L&C Mortgages said HSBC held firm on its five-year fixed rates at 3.99% while other lenders edged deals up.

He said: “There has been a large amount of pricing activity with lenders shifting rates regularly to adjust to the fact that markets now anticipate that base rate may take longer to fall than had previously been hoped. This has forced fixed rates back up as funding costs have risen leading to HSBC being the last lender standing in the sub-4% bracket.  That may catch some borrowers by surprise when the rate story this year has generally been one of falling rates.”

He added that in the short-term, we may see more movement in mortgage rates.

“We may well see market rates bobble around as new data is revealed but for now at least anyone that was holding off in the hope of further cuts may want to reassess their position,” Hollingworth said.