The UK mortgage market is currently experiencing significant shifts, driven by new affordability rules and rising interest rates. Recent changes are enabling more borrowers to switch lenders, while major banks are adjusting their rates in response to increased funding costs.
How Are New FCA Rules Affecting the Mortgage Market?
The Financial Conduct Authority (FCA) has introduced new affordability rules that are making it easier for borrowers to switch mortgage lenders. Research from Stonebridge shows that 98% of modified affordability assessments conducted in the first quarter of 2026 were used for external remortgages. This change allows borrowers to take advantage of potentially better rates and terms from different lenders, rather than remaining with their current provider.
Which Lenders Are Increasing Mortgage Rates?
Several major lenders have announced increases to their mortgage rates, reflecting the rising swap rates that influence funding costs. Barclays, Halifax, HSBC, and TSB are among those hiking rates by up to 20 basis points. NatWest is following suit, raising selected residential and buy-to-let mortgage rates starting tomorrow. In contrast, Shawbrook has reduced some rates, while Keystone has also increased selected buy-to-let rates.
What Should Borrowers Watch Next in the Mortgage Market?
Borrowers should keep a close eye on the rate adjustments from lenders, as Santander has recently announced increases to fixed mortgage rates across its new business and product transfer ranges, effective from July 22. The lender is also expanding its offerings with new 10-year fixed deals and additional options for new builds. Accord Mortgages is similarly raising many residential and buy-to-let rates, although some residential products will see reductions. Newcastle for Intermediaries has also relaunched its joint borrower sole proprietor mortgage range, providing more options for those looking to enter the market.
What This Means for Landlords and Investors in the Mortgage Market
For landlords and property investors, the recent changes in the mortgage market could have significant implications. With major lenders increasing rates, the cost of borrowing is likely to rise, affecting profit margins on buy-to-let properties. However, the surge in remortgaging activity could present opportunities for investors looking to switch to more competitive rates. Additionally, the rebranding of Vida’s later-life mortgage proposition to Next Chapter Lending aims to support older first-time buyers and borrowers extending their mortgages into retirement, which could open new avenues for investment in the housing market.
Frequently Asked Questions
What are the new FCA affordability rules?
The new FCA affordability rules are designed to make it easier for borrowers to switch lenders by modifying how affordability assessments are conducted, allowing more borrowers to qualify for better mortgage rates.
How will rising mortgage rates affect borrowers?
Rising mortgage rates will increase the cost of borrowing for both residential and buy-to-let mortgages, potentially impacting monthly repayments and overall affordability for borrowers.