The UK mortgage market is experiencing significant shifts as major lenders adjust their rates in response to rising funding costs. Recent changes in affordability rules by the FCA are enabling more borrowers to switch lenders, while the new Prime Minister, Andy Burnham, is prioritising housing with ambitious plans for housebuilding.
TL;DR: 98% of modified affordability assessments are now facilitating external remortgages; major lenders like Barclays and NatWest are raising rates by up to 20bps, impacting borrowers and landlords alike.
How are lenders responding to rising costs in the mortgage market?
Several major lenders, including Barclays, Halifax, HSBC, TSB, and Skipton, have increased selected mortgage rates by up to 20 basis points. This trend is largely a response to rising swap rates, which are pushing up funding costs. NatWest has also announced similar rate hikes affecting both residential and buy-to-let mortgages. However, not all lenders are following this trend; Shawbrook has reduced some rates, while Keystone has increased select buy-to-let rates.
What does the FCA rule change mean for borrowers in the mortgage market?
The recent changes to affordability assessments introduced by the FCA have had a positive impact on borrowers. Research from Stonebridge indicates that 98% of modified assessments in Q1 2026 were used for external remortgages, allowing more borrowers to switch to new lenders rather than remain with their current providers. This shift is particularly beneficial for those looking to secure better rates amidst the current market fluctuations.
What should landlords and investors watch for in the mortgage market?
Landlords and investors should pay close attention to the ongoing rate changes and the implications of the new affordability rules. With major lenders adjusting their rates, those looking to remortgage or invest in buy-to-let properties may find opportunities to secure more favourable terms. Additionally, the expansion of Santander’s product offerings, including new 10-year fixed deals and options for new builds, could provide more choices for investors in the coming months.
What this means for first-time buyers in the mortgage market
First-time buyers may find the current market challenging due to rising rates, but the FCA’s rule changes could offer some relief. With more flexibility in affordability assessments, first-time buyers may have a better chance of securing mortgages that suit their financial situations. Additionally, Vida’s rebranding of its later-life mortgage proposition as Next Chapter Lending is aimed at supporting older first-time buyers and home movers, which could open up new avenues for this demographic.
Frequently asked questions
What are the implications of the recent rate hikes?
The recent rate hikes by major lenders mean that borrowing costs are increasing, which could affect affordability for new and existing borrowers. Those looking to remortgage should consider acting quickly to secure better rates before further increases.
How can borrowers benefit from the FCA’s rule changes?
The FCA’s changes to affordability assessments are designed to facilitate easier switching between lenders. Borrowers can take advantage of this by exploring remortgage options that may offer lower rates or better terms compared to their current mortgages.
