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Co-op mortgage rates slashed in ongoing UK mortgage price wars

Co-op Bank's low mortgage rates are now leading the market, but what does this mean for new (and existing) mortgage customers?

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 8 January 2024

6 min read

Co-op mortgage rates slashed in UK mortgage price wars

There’s been a lot of competition between UK mortgage providers through the first couple of weeks of January, as lenders scramble to offer the lowest rates moving into 2024. Since the start of this year, 22 lenders in total have announced cuts to their mortgage interest rates in a move that’s very likely to help in boosting the struggling UK property market.

It’s been a tough few years for UK mortgages and of course for the homeowners who are repaying them, so it’s welcome news that low fixed rates are becoming more widely available across the market.

Co-op is now moving ahead of their competitors, as The Co-operative Bank have dropped their rates to as low as 3.84% for 5-year fixed rate mortgages and 3.74% for 2-year fixes. But what does this mean in real terms for current Co-op mortgage customers and those looking to buy for the first time?

We’ve put together a quick summary of the best mortgage deals that are currently available (including Co-op’s industry leading rates). That way you can assess what mortgage rates are on offer and which lenders and mortgage deals appeal the most to you.

QUICK SUMMARY – Co-op mortgage rates slashed in ongoing mortgage price wars – where to get the best mortgage deals

It’s great to see UK lenders continuing to lower their rates, though it’s hard to say how long this trend will continue for and just how low the rates will fall. While Co-op is currently leading the market, this could change over the next few weeks or months.

  • It’s always a good idea to think carefully before agreeing to any type of large financial commitment or loan such as a mortgage, especially where there is interest involved.
  • Consider carefully if switching from your current mortgage will realistically save you enough money once you account for any possible fees such as early repayment charges.
  • If you’re thinking of buying a first home, remortgaging or moving soon, it’s worth checking all the rates and mortgages on offer to see which lender will work best for you.
  • Anyone who is struggling to find a suitable mortgage rate can quickly get an idea of what is available by using comparison sites such as Money Supermarket. However, if you also want proper advice before making any decisions you should speak to a qualified mortgage broker.

Currently the Co-operative Bank is leading the way in UK mortgages, cutting rates across their 2, 3 and 5 year fixed rate mortgage deals as of the 9th January. This includes decreases of as much as 1.07% which could mean significant savings for Co-op customers.

  • Starting tomorrow, existing Co-op Bank customers can lock in two-year fixed rates beginning at 3.84% and five-year fixed rates from 3.74%.
  • For new customers, a five-year fix is available with rates starting at 3.84%, and two-year fixed deals are available from 4.22%.

These rates are available to both existing and new Co-op Bank customers – something that isn’t always the case when lenders cut their rates. Often lenders will cut rates for current customers only, so it’s good to see that these lower rates are more widely available.

What’s the catch?

We all know that sometimes things can be too good to be true and while a lot of the rates available are good, the best rates will only be available to customers who want to buy or remortgage for at least £750,000.

The next best deals still offer decent rates though including rates of 4.34% for a 2 year fixed rate and 3.89% for a 5 year fixed rate. The exact rate available will vary based on each person who applies and their own circumstances.

You also should be aware that most of these mortgages will come with product fees of £999 and if you are remortgaging you may need to pay additional fees like early repayment charges.

It’s possible that these rates won’t be around for long either as Co-op will often introduce and then quickly pull rates, so you will probably need to act fast to take advantage of these deals.

Are Co-op mortgages any good?

It’s common to use a bank like Co-op when you need a mortgage and they are a generally well trusted UK lender. The Co-operative Bank currently has an independent review score of 4.2 out of 5.0 on TrustPilot which indicates customers are overall happy with the products and services provided.

You can view the Co-operative Bank’s reviews for yourself here: TrustPilot – The Co-operative Bank

While these reviews aren’t specific to mortgages it does indicate a lender that is well liked by many customers. There are some negative reviews (which is the case for most financial services businesses), but on looking through none of these reviews seem to be about mortgages and mainly focus on current, business and savings accounts.

Note: This customer review score is based on over 7,000 reviews and is accurate as of 08/01/2023. It is possible that this score will go up or down over time as more customers add their ratings.

We recently wrote about HSBC’s sub 4% mortgage rates being announced and there are many more lenders who have dropped their rates.

This includes some of the UK’s biggest lenders like NatWest, TSB and First Direct. It’s expected that interest rates will continue to fall this year with Bank of England rates expected to continue dropping as inflation reduces.

The drop in pricing isn’t exactly a new development, as rates have been consistently falling over the last 5 months according to data from MoneyFacts with them now hitting the lowest levels in 6 months.

What is a good interest rate for a mortgage?

In the past, it was normal for lenders to offer higher rates if you opted for a longer fixed rate mortgage. This isn’t the case anymore and in fact now you can often get a better rate if you fix over a longer period of time.

The interest rate that is best for you will be based on what is affordable for you and of course a low rate is always favourable. However, you shouldn’t get a mortgage solely based on the interest rate as you need to take into account other factors like:

  • Any upfront fees that you may need to pay
  • Customer reviews
  • Any extra benefits that the lender offers
  • Type of mortgage (some lenders will be better for people with a poor credit history for example)

It’s important to remember as well that deals won’t stick around forever, so if you see a rate that you think is good you should act quickly to make sure you don’t miss out.

While Co-op has announced some of the best rates on the market, there are also some other great rates available on the market. Here’s a quick breakdown of the best interest rates currently available on the UK market. All of these figures have been generated based on a £200,000 repayment mortgage (90% LTV) to be repaid over a 30 year term.

2 year fixed rate mortgages

Mortgage lenderInterest rateFees applicable
HSBC UK4.99% (£965.18 per month) (APRC – 6.8%)£1,016 upfront
Newcastle Building Society5.15% (£982 per month) (APRC – 6.7%)£1,264 upfront
Virgin Money5.19% (£987 per month) (APRC – 8.9%)£1,320 upfront
First Direct5.24% (£992 per month) (APRC – 6.8%)£490 upfront
Yorkshire Building Society5.29% (£998 per month) (APRC – 7.4%)£1,495 upfront

5 year fixed rate mortgages

Mortgage lenderInterest rateFees applicable
HSBC UK4.51% (£913 per month) (APRC – 6.4%)£1,516 upfront
First Direct4.69% (£932.47 per month) (APRC – 6.4%)£490 upfront
Virgin Money4.71% (£934.63 per month) (APRC – 8.1%)£1,320 upfront
M Powered4.73% (£936 per month) (APRC – 7.7.%)£2,029 upfront
Newcastle Building Society4.75% (£938 per month) (APRC – 6.3%)£1,264 upfront

10 year fixed rate mortgages

Mortgage lenderInterest rateFees applicable
Nationwide5.18% (£986 per month) (APRC – 6.6%)£999 upfront
Nationwide5.3% (£999.55 per month) (APRC – 6.6%)£0 upfront
Yorkshire Building Society5.59% (£1,032 per month) (APRC – 6.9%)£1,495 upfront
Yorkshire Building Society5.74% (£1,049 per month) (APRC – 7.0%)£1,495 upfront
Virgin Money5.99% (£1,078 per month) (APRC – 7.7%)£213 upfront

Note: Actual rates available can vary over time and will vary based on your own financial circumstances, so these figures are intended as examples only.

Changing your mortgage or applying for a new one is always going to be a big decision and there is no right answer as to what you should do. You should think about your own situation and what feels right to you.

Co-op Bank have got some good deals on the table currently, but you should do some research and see whether Co-op seems like a good fit for you overall. Low rates aren’t the only reason to choose your mortgage lender and if you’re unsure of which lender is best, you might want to get some advice from a qualified mortgage broker.

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