TSB have announced some surprisingly huge new increases to their interest rates this morning. As brokers, we did expect that we would see TSB rates increasing, however these new products seem to be much higher than most other lenders. The question on everyone’s lips right now is “Are these rates really necessary?”.
TSB Rate Rises
In the last week of May 2023 and the first week of June 2023, we have seen many lenders removing their products from the market and replacing them with higher rates. Not something that borrowers and brokers alike necessarily wanted to see, especially after many lenders dropped their rates at the beginning of 2023. However, so far it seemed that the rate increases coming from the lenders were not a huge change. But, TSB have today announced some rather worrying rises to their core products that seem like a bit of an overkill in our eyes.
Here is a breakdown of what TSB have announced to brokers this morning:
Residential Mortgage Products
• 2 and 5 Year Fixed Shared Ownership House Purchase, rates increasing by up to 0.70%
• 2 Year Fixed Shared Ownership Remortgage, rates increasing by up to 0.65%
• 5 Year Fixed Shared Equity House Purchase, rates increasing by up to 0.60%
• 2 Year Fixed Shared Equity Remortgage, rates increasing by 0.65%
Buy to Let
• Reintroduction of 2 Year Fixed House Purchase and Remortgage products, with rates starting from 5.29%
• 5 Year Fixed House Purchase and Remortgage, rates increasing by 0.70%
Product Transfer
• 2 and 5 Year Fixed Buy to Let, rates increasing by up to 0.75%
Additional Borrowing
• 2 and 5 Year Fixed Buy to Let, rates increasing by up to 0.75%
What Do These Rate Rises Mean In Real Terms
Well obviously, it means that borrowers will have to pay more per month on their mortgage than they did before. But what could that look like in real terms? A 0.70% increase is quite a large increase, especially when the average mortgage rate in the UK is currently between 5.04% and 5.64% anyway! Using TSB’s real available product range, let’s have a look at what the monetary value of the change to TSB rates is:
TSB currently offer a 2-year fixed rate product between 85% and 95% Loan to value. So let’s use this product as an example. Someone using this product last week would have been on a rate of 5.74%, an already high rate and above the average for the UK. Since the changes announced today, this product has risen by 0.70% to 6.44%.
If someone owned a property valued at £500,000 with an 85% mortgage taken over 30 years, with the original product rate of 5.74%, they would have paid £2,477 a month on their loan. Now, with the new rate of 6.44%, this loan will go up to £2,670 a month. Although at face value, not a ridiculous change, this extra £193 a month or £2,316 a year can make a huge difference to people’s finances and could cause some real financial difficulties for people. Rising mortgage rates coupled with increased utility bills and other cost of living expenses could really impact people.
Speak To a Mortgage Advisor
So what can people do? Unfortunately we can’t force the lenders to drop their rates. But we as mortgage advisors can help you to secure the most competitive lender and rate available. At Oportfolio, we have access to all the lenders and products on the market. So don’t settle for higher than average interest rates, speak to one of our brokers today to start the mortgage journey.
