TSB Raises Product Transfer Mortgage Rates by 35bps: What London Landlords Need to Know

Understanding the Latest TSB Mortgage Rate Increase

TSB has announced a 35 basis points (bps) increase in product transfer mortgage rates effective from Tuesday, adding to a recent series of hikes including a prior 45bps rise on fixed rates. This move reflects broader market trends, with average two-year fixed mortgage rates now around 5.75%, and standard variable rates (SVR) averaging 7.13%. For landlords in London, particularly those with mortgages due to transfer products or exiting fixed deals, this signals a significant shift in borrowing costs.

What This Means for Landlords

The rate rise affects landlords differently depending on their mortgage arrangements and portfolio size:

• Single-Unit Landlords and Accidentals: If you hold a mortgage product transfer with TSB, expect your monthly repayments to increase by approximately 0.35% of the outstanding loan balance. For example, on a £200,000 mortgage, this equates to an extra £58 per month. This increase can squeeze rental income margins, especially where rents are fixed or capped.

• HMO and Portfolio Landlords: Larger portfolios with multiple TSB mortgages or frequent product transfers will face cumulative cost increases, impacting overall cash flow. Planning for these hikes is crucial to maintaining profitability and ensuring compliance with affordability assessments for new lettings.

• Landlords Approaching Fixed Deal Expiry: Those transitioning off fixed deals onto SVRs face even steeper rises, with SVRs averaging over 7%. This could mean a jump in monthly mortgage costs exceeding 1%, potentially pushing landlords to reassess rent levels or refinance options.

Practical Implications and Next Steps

1. Review All TSB Mortgage Product Transfers Immediately: Identify which properties are affected by the 35bps increase. Contact your mortgage broker or lender to confirm exact new rates and repayment figures.

2. Reassess Rental Pricing and Affordability: Calculate how increased mortgage costs affect net rental yields. For some landlords, it may be necessary to adjust rents or negotiate terms with existing tenants, balancing market conditions and tenant retention.

3. Communicate Proactively with Tenants and Stakeholders: If rental adjustments become necessary, early and transparent communication helps maintain good landlord-tenant relationships and reduces turnover risk.

4. Monitor Fixed Deal Expirations Closely: Prepare for payment shocks as fixed deals end. Consider refinancing options or locking in new fixed rates where possible to mitigate sharp increases.

5. Stay Alert for Further Lender Announcements: Other lenders have also raised rates recently. Maintain close contact with your mortgage advisor to adapt strategies promptly.

Tailoring Actions to Your Landlord Profile

• Single-Unit and Accidental Landlords: Focus on budgeting for increased repayments and consider the impact on your personal finances. Seek advice on potential rent reviews or mortgage remortgaging.

• HMO and Portfolio Landlords: Use portfolio management tools to model the financial impact of rate rises across all properties. Engage with letting agents and financial advisors to optimise rent setting and cash flow.

How Rentals & Sales Can Support You

Our team offers comprehensive mortgage and portfolio reviews tailored to London landlords. We can help you:

• Audit your current mortgage arrangements and identify exposure to rate hikes
• Develop pricing strategies that reflect increased borrowing costs without compromising tenant demand
• Navigate refinancing or product transfer options to secure more favourable terms
• Implement compliance checks ensuring affordability criteria are met for new and renewing tenancies

Contact us to schedule a personalised consultation.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Landlords should consult with qualified mortgage advisors or financial professionals before making decisions.