Home Money Big banks cut mortgage rates, but the market average is rising

Big banks cut mortgage rates, but the market average is rising

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Incoming cuts: Barclays is cutting some of its lowest-priced fixed rate offerings
  • The lowest five-year correction is now 4.1% and the lowest two-year correction is 4.22%.

Another major bank has announced it is cutting mortgage rates, although the market average has slowly risen over the past month, data reveals.

Barclays will reduce several of its fixed rate operations by up to 0.14 percentage points from December 10.

This follows NatWest cutting mortgage rates by up to 0.39 percentage points last week.

Barclays’ cheapest five-year rate will now be 4.11 per cent, although this rate is only available to those looking to buy a home with at least a 40 per cent deposit.

For homeowners who need to remortgage, Barclays is charging 4.12 per cent for those who have at least 40 per cent equity in their home.

Other notable rate cuts include its five-year fixation of 4.22 per cent aimed at those buying a property with a 25 per cent deposit.

Incoming cuts: Barclays is cutting some of its lowest-priced fixed rate offerings

Mortgage brokers welcomed the news as another step in the “right direction” for borrowers.

Justin Moy, chief executive of brokerage EHF Mortgages, told news agency Newspage: ‘While not huge, these are significant and symbolic rate cuts by Barclays.

‘After the budget problem, rates are starting to move in the right direction again.

“Lenders appear to be gearing up to react to the stamp duty time bomb that will drive business through the first quarter of 2025, and competitive rates will put them in pole position rather than leaving them stuck on the starting blocks.”

From 1 April 2025, the thresholds at which people start paying stamp duty on home purchases will return to the levels set before temporary changes were made in 2022.

Andrew Montlake, managing director of mortgage broker Coreco, added: “Right now it’s about every little bit of help as borrowers seek some crumb of comfort in the fact that mortgage rates are starting to stabilize once again.”

Average fixed mortgage rates rise

While cheaper mortgage rates are falling, the average rate across the market has been rising according to rate monitor Moneyfacts.

Over the past month, average two- and five-year fixed-rate mortgage rates rose 0.13 and 0.19 percentage points, to 5.52 percent and 5.28 percent, respectively.

This, it says, was the largest monthly increase in the average five-year fixed rate since August 2023.

Rachel Springall, finance expert at Moneyfacts, said this was because lenders had repriced their products in the face of volatile financial markets.

“This month the average five-year fixed rate saw a notable monthly increase, and through 2024 the rate has not fallen as much as its two-year counterpart,” he said.

‘This will be disappointing news for those borrowers who prefer to secure a long-term deal.

‘It is estimated that there are millions of borrowers who have yet to get their mortgage back in order since rates began to rise in 2021, so it is advisable to seek advice.

‘Those who signed a five-year fixed deal in 2019 would have been charged on average 2.74 per cent, but that rate has almost doubled, now at 5.28 per cent.

“Borrowers will expect mortgage rates to fall next year, and while there is speculation of multiple Bank of England base rate cuts, persistent inflation may delay such decisions.”

How to find a new mortgage

Borrowers who need a mortgage because their current fixed-rate agreement is ending or because they are buying a home should explore their options as soon as possible.

Quick mortgage search links with This is Money partner L&C

> Mortgage rate calculator

> Find the right mortgage for you

What happens if I need to remortgage?

Borrowers should compare rates, talk to a mortgage broker and be prepared to take action.

Homeowners can close a new deal six to nine months in advance, often with no obligation to accept it.

Most mortgage agreements allow fees to be added to the loan and are only charged when requested. This means borrowers can get a rate without paying expensive processing fees.

Please note that by doing this and not paying off the fee upon completion, interest will be paid on the fee amount for the entire term of the loan, so this may not be the best option for everyone.

What happens if I am buying a house?

Those with agreed-upon home purchases should also try to lock in rates as early as possible, so they know exactly what their monthly payments will be.

Buyers should avoid overreaching and be aware that home prices may fall as higher mortgage rates limit people’s borrowing capacity and purchasing power.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with free broker L&C, to provide you with free, expert mortgage advice.

Interested in seeing today’s best mortgage rates? Wear This is the best mortgage rate calculator from Money and L&C to show offers that match your home value, mortgage size, term, and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s Online Mortgage Finder? It will search thousands of offers from over 90 different lenders to discover the best deal for you.

> Find your best mortgage deal with This is Money and L&C

However, please note that rates can change quickly, so if you need a mortgage or want to compare rates, speak to L&C as soon as possible so they can help you find the right mortgage for you.

Mortgage service provided by London & Country Mortgages (L&C), which is authorized and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most buy-to-let mortgages. Your home or property can be repossessed if you don’t keep up with your mortgage payments.

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