Blink-and-you’ll-miss-it mortgage deal: Co-op Bank pulls best buy rates three days after launch

The Co-operative Bank is withdrawing most of its market leading mortgage rates, just three days after launching them.

Since 1 January, 44 lenders have cut rates on products. But on Monday, the Co-op blew the mortgage price war wide open with a number of best buy deals.

It slashed rates across its two, three and five-year fixed-rate products by up to 1.07 percentage points leaving many lenders trialing in their wake.

Blink-and-you’ll-miss-it: The Co-operative Bank is withdrawing most of its market leading mortgage rates, only three days after launching them

For a short space of time new customers were able to secure a five-year fix, with rates starting from 3.84 per cent and two-year fixed deals starting from 4.22 per cent.

However, after little more than three days of leading the market, the lender has pulled out. 

The Co-Op released a statement to mortgage brokers this afternoon stating: ‘By 5pm on Thursday 11 January 2024 we will temporarily withdraw the majority of our fixed rate products for new business.’

It said all of its two-year, three-year and five-year fixed rate deals are being withdrawn for mortgages covering up to 85 per cent of a property’s value.

However, it made no mention of its deals aimed at those needing mortgages that cover more than 85 per cent of a property’s value.

This means its market leading rates reserved for those buying or remortgaging with 5 or 10 per cent deposits or equity should remain.

Those buying with a 10 per cent deposit can get a 4.02 per cent rate with Co-op if fixing for five years or a 4.8 per cent rate if fixing for two-years.

Meanwhile, those with a 5 per cent deposit or equity can get 4.48 per cent when fixing for five years or 4.99 per cent when fixing for two years.

Mortgage broker Chris Sykes suspects the Co-op Bank has been swamped with more applications than it could handle.

He says: ‘They were offering the best rates at almost every loan to value whether that meant people buying with 5 per cent deposits or 40 per cent deposits. 

‘Those remortgaging were also benefiting from these best rates from the Co-op.

‘In fact, almost every application we’ve done for clients on a residential basis has recommended the Co-op since these rates were released.

‘Its rates were simply far too good, so they’ve just been inundated.’

David Hollingworth, associate director of L&C Mortgages says that it shows that even with mortgage rates falling of late, borrowers would always be wise to move quickly to secure the best rates. 

‘This quick withdrawal shows that although the market has been improving, lenders can’t necessarily leave these deals out there indefinitely,’ says Hollingworth.

‘These are top rates but have only lasted a matter of days. The quick withdrawal of these deals is likely to be a sign of just how popular they have been.

‘The New Year has got off to a quick start and borrowers have clearly been quick to take advantage of these rates. 

‘Lenders will still need to manage the flow of business to ensure that they can maintain service levels and that will no doubt be a factor here.

He adds: ‘It does underline that these rates can come and go quickly and with swap rates edging up a little, there is no guarantee that lenders will keep cutting lower and lower. 

‘There are still other competitive options available for those that would like to lock in now and I expect we will see other lenders looking to catch up with the market leaders.’

Expert: mortgage broker, David Hollingworth says this quick withdrawal shows although the market has been improving, lenders can’t necessarily leave these deals out there indefinitely

What are the best deals?

Thanks to a manic start to the year in which more than 30 mortgage lenders have cut rates. there are still plenty of rates below 4 per cent. 

The average five-year fixed mortgage is currently 5.29 per cent, according to Moneyfacts, compared to the average two-year fix of 5.69 per cent.

But there are deals around which are much more competitive than these average rates. 

The lowest rates on offer are typically aimed at homebuyers with the biggest deposits and homeowners remortgaging with the largest amounts of equity.

We have taken a look at the best deals on the market based on a 25-year mortgage for a £290,000 property – the current UK average house price according to the ONS.

To check up-to-the minute rates based on your own circumstances, use This is Money’s mortgage finder and best buy tables.

Heading down: Mortgage rates have been falling over the past few months with markets now forecasting the Bank of England base rate will begin being cut later this year

Bear in mind that the mortgage deals below are best in terms of having the lowest rate. They may not be the cheapest deal overall when arrangement fees are also factored in.

The deals below are aimed at new customers. Existing customers may be able to secure a cheaper rate by switching internally to a deal with their current lender.

Buying with bigger deposit mortgages

Two-year fixed rate mortgages 

Barclays has a two-year fixed mortgage at 4.17 per cent with a £899 fee at 60 per cent loan to value.

Halifax has a two-year fixed rate at 4.27 per cent with a £1,099 fee at 60 per cent loan to value.

Five-year fixed rate mortgages 

Santander has a five-year fixed rate mortgage at 3.94 per cent with an £999 fee at 60 per cent loan to value.

First Direct has a five-year fixed rate at 3.99 per cent with a £490 fee at 60 per cent loan to value.

10-year fixed rate mortgages

First Direct has a 10-year fixed rate at 3.99 per cent with a £490 fee at 60 per cent loan to value.

Remortgaging with higher equity

Two-year fixed rate mortgages 

Virgin Money has a two-year fixed rate at 4.34 per cent with a £749 fee at 80 per cent loan to value.

TSB has a two-year fixed product at 4.44 per cent with a £994 fee at 60 per cent loan to value.

Five-year fixed rate mortgages 

Santander has a five-year fixed rate at 3.89 per cent with an £1,048 fee at 60 per cent loan to value. (Available from January 9)

Virgin Money has a five-year fixed-rate at 3.89 per cent with a £895 fee at 60 per cent loan to value.

10-year fixed rate mortgages

HSBC has a 10-year fixed rate at 3.99 per cent with a £999 fee at 60 per cent loan-to-value.