Market volatility linked to Middle East conflict prompts fresh rate hikes and tighter stress tests
HSBC and Santander have announced increases to residential and buy-to-let mortgage rates, alongside changes to affordability assessments, effective from tomorrow, 27 March.
HSBC has repriced a wide range of products across its residential and buy-to-let portfolios as part of a broader refresh of its mortgage range. The bank is also increasing its residential affordability stress rates, which it said was intended to support responsible lending.
Within residential lending, HSBC’s higher rates will apply to existing customer switches and further advances across two-, three-, five- and ten-year fixes, tracker deals and Premier-only products. Changes span loan-to-value bands from 60% to 95%.
First-time buyer and home mover options are also included, covering fixed and tracker ranges, high-value mortgages and products aimed at energy-efficient homes with EPC ratings of ‘A’ or ‘B’. Remortgage pricing is due to rise on fixed and tracker products, including cashback and energy-efficient variants.
International residential and international remortgage products are also being repriced, with fixed and tracker rates increasing between 60% and 75% LTV.
Across buy-to-let, HSBC said purchase, remortgage and existing customer switch products will see higher rates, including fixed, tracker and Premier-exclusive deals. The changes cover 60% to 80% LTV bands, including energy-efficient options.
Santander also confirmed increases to its mortgage product rates, citing market conditions. Its new business and product transfer fixed rates will rise, with product transfers increasing by up to 0.53% and new business fixed rates rising by up to 0.41% across residential and buy-to-let.
The lender is also lifting some residential and buy-to-let affordability rates as its pay rates increase, while keeping its loan-to-income limits unchanged.
For buy-to-let, Santander said affordability rates are rising by 0.50%. The standard buy-to-let affordability rate is increasing to 7.5% from 7%, while the five-year fixed buy-to-let affordability rate is moving to 5.50% from 5.00%. The buy-to-let affordability rate for a “£4£ remortgage” is also increasing to 5.5% from 5%.
Meanwhile, TSB said it is withdrawing its existing residential and buy-to-let house purchase products at 5pm today and relaunching the ranges with higher rates tomorrow.
In its residential house purchase range, TSB is increasing two-year fixed purchase rates, including affordable housing products, by 0.45%. Three-year fixed purchase rates will rise by 0.30%, and five-year fixed purchase rates, including affordable housing, by 0.25%.
In buy-to-let and portfolio buy-to-let, two-year fixed purchase rates will increase by 0.45% and five-year fixed purchase rates by 0.25%.
“The knock-on implications of war in the Middle East are starting to come through thick and fast,” commented Kevin Mountford, personal finance expert and co-founder of Raisin UK. “In the last few days, we’re seeing major jumps in mortgage rates.
“For anyone coming to the end of a fixed deal, the risk is not just a higher rate, but a sudden increase in monthly repayments at a time when wider living costs are still under pressure.
“It’s essential to act early. Many borrowers can secure a new deal before their current one ends. This can provide more protection if rates move again.”
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