Lender Competition Leading to Better Mortgage Rates

City of London

In exciting news for homeowners and prospective buyers in the UK, lenders are starting to really compete on rates. Leading lenders are slashing rates, and for the first time since June, we’re seeing fixed-rate mortgages priced below 5%. Here’s what you need to know:

Fresh Wave of Rate Reductions

  • UK lenders have been steadily lowering their mortgage rates for several weeks.
  • The recent days have witnessed a flurry of rate reductions, with more expected to take effect soon, courtesy of banks like Halifax.

Sub-5% Fixed-Rate Mortgage

  • The Mortgage Works, a division of Nationwide building society, has launched a five-year fixed-rate deal priced at 4.99%.
  • This sub-5% rate, while not for standard residential mortgages, is available for buy-to-let purposes to borrowers seeking up to 55% of the property’s value.

Current Market Averages

  • Moneyfacts, a financial data provider, reports that the average rate on a new five-year fixed-rate mortgage is currently around 6.14%.
  • However, some best-buy deals are notably cheaper. As of Thursday, the cheapest five-year residential fixed-rate mortgage stood at 5.12%.

More Rate Cuts on the Horizon

  • Halifax has announced reductions of up to 0.5 percentage points on selected fixed deals, set to take effect soon.
  • Other lenders, like Coventry Building Society, are also planning rate reductions in the coming days.

Recent Rate Cuts by Major Lenders

  • Nationwide recently reduced some of its fixed rates by up to 0.29 percentage points.
  • On the same day, Santander trimmed selected new fixed-rate mortgages by up to 0.14 percentage points.

Factors Behind the Rate Drops

  • Mortgage costs had been on the rise for several months.
  • The rate reductions began in July following lower-than-expected UK inflation figures.

Potential Impact of Future Rate Hikes

  • Despite the ongoing rate reductions, the Bank of England is expected to make a decision regarding a rate hike on September 21.
  • If the Bank decides to raise rates, it could slow down further mortgage rate reductions.

Boosting Borrower Confidence

  • These lower rates offer a glimmer of hope for borrowers concerned about the end of their current fixed-rate deals.
  • Prospective homebuyers who have been waiting on the sidelines for better rates may also be encouraged to make their move.

In summary, UK lenders starting to compete more aggressively is bringing welcome relief to borrowers and potential homeowners. With rates below 5% and more reductions on the horizon, this could be an opportune time to explore your mortgage options or consider that long-awaited home purchase. However, keep an eye on the Bank of England’s decision, as future rate hikes may impact the trajectory of these favorable rates.

Peter Austin
Peter Austin

Peter is a writer and photographer with a great interest in property, design, and the economy.

2022 British Property Awards Gold Winner for Lincoln, Banner
2023 British Property Awards Gold Winner for Lincoln, Banner