UK Mortgage Market Rate Updates

UK mortgage market shifts as Barclays cuts rates while TSB and Co-op increase costs, reshaping options for borrowers. This week, three major banks – Barclays, TSB, and the Co-operative Bank – have announced changes to their mortgage ranges. Some borrowers will see costs increase, while others may benefit from reductions.

UK Mortgage Market and Barclays’ Reductions

Barclays is making the most significant adjustments, with the majority of its residential mortgage products seeing reductions. A smaller number of deals will rise, but the overall trend is downward.

Purchase-Only Range

For those looking to buy a property, Barclays is making several competitive cuts:

• Two-year fixed at 80% LTV – dropping below 4% for the first time in months, moving from 4.05% to 3.98% with a £899 fee.
• Fee-free equivalent – also reduced, now at 4.18% following a 4 basis point cut.
• 95% LTV two-year fixed with no fee – cut from 4.95% to 4.85%, a reduction of 10 basis points.
• Five-year fixed at 95% LTV with no fee – trimmed to 4.80%, down from 4.87%.

Other purchase products will see smaller reductions, providing some welcome relief for buyers navigating high costs.

Remortgage Range

Barclays is also easing the pressure for homeowners seeking to remortgage:

• Two-year fixed at 80% LTV with a £999 fee – lowered from 4.34% to 4.24%.
• Great Escape two-year fixed at 80% LTV with no fee – down by 10 basis points to 4.56%.

These adjustments are aimed at attracting both new buyers and existing borrowers, signalling Barclays’ intent to remain competitive as mortgage volumes remain under scrutiny.

Co-op Bank Pushes Rates Higher

In contrast, the Co-operative Bank has taken a different approach by raising mortgage rates across several products.

Purchase Products

For new customers, two and three-year fixed deals at 80%, 90%, and 95% LTV have all increased by up to 13 basis points. This will impact first-time buyers in particular, many of whom rely on higher LTV products to get on the property ladder.

Remortgage Products

The changes extend to remortgage deals:

• Two-year fixed with a £999 fee at 70% and 85% LTV is now up by 14 basis points.
• Two-year fixed at 65% LTV with no fee – increased by 5 basis points.

These adjustments reflect the bank’s cautious stance amid market volatility, potentially dampening affordability for some households.

TSB Adds Pressure with Increases

TSB has also announced rate increases across part of its residential mortgage range.

Product Transfers

• Two-year fixed at 60% LTV with no fee – now priced at 4.14%, up by 10 basis points.
• Other two-year fixed deals across 60% to 90% LTV have also been raised by 10 basis points.

Additional Borrowing Range

• Two-year fixed products at 0–80% LTV – increased by up to 10 basis points.

These changes suggest TSB is recalibrating its lending book, focusing less on aggressive pricing and more on balance sheet stability.

What This Means for Borrowers

For those considering a mortgage in the coming weeks, these changes highlight how quickly the market can shift. Barclays’ reductions provide opportunities for borrowers, particularly first-time buyers and remortgagers seeking slightly lower monthly payments. On the other hand, rising costs at TSB and Co-op mean some homeowners may need to act quickly to secure better rates elsewhere.

Key Considerations

• First-time buyers may benefit most from Barclays’ 95% LTV cuts.
• Remortgagers will find competitive options at Barclays, though should compare against smaller lenders too.
• Existing customers at TSB and Co-op may face higher costs, reinforcing the need to review deals well before expiry.

Future Outlook for the UK Mortgage Market

The split between lenders increasing and reducing rates reflects wider uncertainty in the housing market. Swap rates, inflation forecasts, and the Bank of England’s stance on base rate movements continue to influence lender behaviour.

• Barclays’ cuts suggest optimism that funding costs will ease further.
• TSB and Co-op’s increases highlight concerns that the market may not yet be on stable ground.

Industry analysts believe lenders will continue to adjust rates frequently over the next quarter as they compete for market share in a challenging environment.

Final Thoughts

The latest moves from Barclays, TSB, and Co-op show how differently banks are responding to the same economic backdrop. While some are making borrowing more affordable, others are tightening their pricing. For borrowers, the message is clear: shopping around has never been more important.

Those approaching the end of a fixed-term deal should act early, while new buyers will need to weigh up upfront fees against headline rates. With fluctuations likely to continue, securing expert advice and keeping an eye on daily lender updates will remain essential in 2025.