Santander, TSB, HSBC customers who are paying off mortgage 'warned'

TSB, Santander and HSBC customers who have mortgages have been warned over interest hikes. TSB Bank has increased fixed mortgage rates by up to 0.3 per cent, while Santander has raised rates on deals by up to 0.29 per cent.

HSBC UK has also increased interest rates for the second time in two weeks across a number of its fixed-term mortgage deals. Santander said it is increasing fixed rates for most residential rates for new buyers and remortgage customers by up to 0.29 per cent from today.

Some buy to let rates are going up by 0.31 per cent. However, customers on variable or tracker deals will see their rates fall in line with the Bank of England cut in its benchmark rate from five per cent to 4.75 per cent last week.

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The majority of borrowers are on two and five year fixed deals. John Fraser-Tucker, head of mortgages at broker Mojo Mortgages said: “While the Bank of England’s decision to lower the bank rate last week might lead some to expect across-the-board reductions in mortgage rates, it’s important to understand that the mortgage market doesn’t always move in perfect sync with the Bank of England’s base rate decision.

“Fixed-rate mortgages, in particular, are influenced by a complex array of factors beyond just the Bank Rate. These can include the lender’s own funding costs, their view on future economic conditions, competitive positioning in the market, and even their internal goals for new business.

“In Santander’s case, their decision to increase some fixed rates, despite the recent Bank Rate reduction, could be driven by any number of these factors. Lenders continually assess risk and adjust their offerings accordingly. Sometimes, this means we see rate increases even in an environment where we might expect decreases.”

Rohit Kohli, director at The Mortgage Stop, said: "Many borrowers will be left scratching their heads as to why, less than a week after the Bank of England cut the base rate by 0.25%, lenders like TSB are increasing fixed rates. The markets are still feeling the aftershocks of the Labour Budget.

"Although it wasn’t as disastrous as the mini-budget, the longer-term cost of borrowing continues to rise. Gilt yields and SWAP rates are reacting not only to budgetary policy but also to geopolitical uncertainties, including Trump’s re-election to the White House.”

He added: “Anyone holding out for big cuts in interest rates is taking a gamble for now."