Co-Op Pulls Competitive Rate As Market Pauses To Take Stock – Forbes Advisor UK

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12 January: Wholesale Rate Rises Affect Consumer Deals

Co-operative Bank for Intermediaries has pulled its most competitive sub-4% fixed rate mortgage deals in the wake of rising bank swap rates, indicating fixed rates may stabilise at current levels or may even edge up, writes Jo Thornhill.

The bank, which has offered a five-year fixed rate deal at 3.89% (60% loan to value) for residential purchase and remortgage since 5 January (see stories below), is set to remove this deal from the market, along with other low price two, three and five-year deals. 

Co-op still offers some sub-4% deals but only to borrowers with a mortgage loan size of £750,000 or more. The new five-year fixed rate for smaller mortgages starts from 4.02% with a £999 fee (this rate is available up to 90% LTV) and there is a fee-free deal at 4.28%.

The specialist buy-to-let lender Lendinvest has also announced it is removing its deals from the market today with a view to repricing its fixed rates higher from Monday (15 January) due to market volatility.

Swap rates, the interest rates at which banks lend to each other in the market and which dictate the movement of fixed mortgage rates for customers, have been steadily rising in recent days. 

It means that although many lenders have been aggressively cutting fixed rates since the new year, this trend could be about to reverse.

First Direct, HSBC, Santander, Virgin Money and Yorkshire building society are among lenders all still offering five-year fixed rates (either for home purchase, remortgage or both) at under 4%.

Despite the move by Co-operative, other lenders, with less keenly priced fixed rates, have continued to reduce the cost of their mortgage deals this week.

Coventry building society has cut residential fixed rates by up to 0.2 percentage points and buy-to-let rates by up to 0.22 percentage points. The mutual lender is offering a five-year fixed rate for residential remortgage from 4.29% (65% LTV) with a £999 fee, for example.

Landbay, the specialist buy-to-let lender has cut fixed rates by up to 0.4 percentage points and has deals at sub-4%. It is offering a two-year fixed rate at 3.94% (up to 65% LTV) although there is a high 6% arrangement fee.

Fleet Mortgages has tweaked rates down across its standard BTL range, as well as deals for limited companies and houses for multiple occupancy (HMOs) by up to 0.15 percentage points. Its standard BTL two-year fixed rate for individual landlords at 75% loan to value is now 4.89% with a 3% fee, and a five-year fix at 70% LTV is at 4.59% with a 5% fee.

Nick Mendes at broker John Charcol said: “Expect to see a few lenders over the next few days…