Lenders launch wave of mortgage rate cuts as five-year average falls below 6%

Halifax, Barclays and Clydesdale have cut rates this afternoon
Follow the movements of NatWest, Santander and HSBC earlier in the week.
Typical five-year fix now below 6% for first time since July, says Moneyfacts

By Helen Crane

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Lenders launch wave of mortgage rate cuts as five-year average falls below 6%What have lenders been doing? Share or comment on this article:

Updated: 09:47 EDT, September 28, 2023

The average five-year fixed mortgage rate has fallen below 6 percent, as the cost of borrowing for homeowners continues to fall.

The typical new five-year fixed mortgage is now priced at 5.99 per cent, up from 6.03 per cent on Wednesday, according to financial information service Moneyfacts.

The last time the five-year average rate, which includes all deposit sizes, was this low was in early July. On July 19, the typical five-year rate hit 6.33 percent.

It comes as a flurry of lenders have announced they will cut their mortgage rates.

Cheaper deals: The average five-year fixed mortgage is now priced at less than 6%, according to Moneyfacts, as several lenders have cut their rates.

Halifax will launch a five-year fixed rate of 4.93 per cent next week, which would be the cheapest on the market.

Barclays and Clydesdale Bank have also announced a series of mortgage rate cuts this afternoon.

Two-year fixed agreements are still more expensive than five-year ones. This is partly because they are in higher demand, as borrowers are taking shorter steps in the hope that rates will become cheaper in the coming years.

Moneyfacts says the average two-year fixed mortgage is currently carrying a rate of 6.5 per cent, up from 6.53 per cent the day before.

There are deals available at substantially cheaper rates than these averages, especially for those with more than 40 per cent equity in their property or a 40 per cent deposit to pay.

We’ve outlined some of the cheapest rates below and you can also shop for the best deal for your mortgage size and deposit using our mortgage rate finder.

Simon Gammon, managing partner at brokerage Knight Frank Finance, said: “Lenders continued to cut mortgage rates in the wake of better inflation figures and the Bank of England’s decision to keep the base rate at 5.25 per cent this month. which will go a long way to improving confidence in the real estate market.

However, he added that borrowers should not expect rates to drop much in the near future.

“We expect more marginal cuts over the next few weeks, but they will soon stabilize,” Gammon added.

“The best fixed rate deals already start at a four, and we expect rates to stabilize in that range until the Bank of England opts to cut the base rate, which is unlikely before next spring at the earliest. soon”.

With new mortgage rates released periodically, Nicholas Mendes, mortgage technical manager at broker John Charcol, gave this advice to anyone in the middle of a purchase or remortgage application:

‘This afternoon has really begun among lenders, in quick succession there has been an avalanche of advance notices from lenders.

‘For anyone with an application on the line, speak to a broker to see if you can get a better deal than the one you originally submitted.

“Likewise, those who don’t use a broker now have the opportunity to speak to someone to ensure they get the best deal now, but also in the future.”

What have lenders been doing?

Major lenders have cut rates over the past week, following the Bank of England’s decision to keep the base rate at 5.25 percent.

Some have broken the 5 per cent barrier on their five-year fixes, although the best deals are only offered to homebuyers, rather than those remortgaging.

halifax has said it will offer a five-year fixed mortgage at a rate of 4.93 per cent from Monday, available to those buying a home with a 40 per cent deposit. Customers can only apply through a mortgage broker.

Its best two-year rate is now 5.44 per cent with a fee of £999.

From today, NatWest has reduced some of its mortgage rates by as much as 0.29 percent. This includes a five-year fixed rate deal for those buying a home with a deposit of 25 per cent or more, priced at 4.94 per cent with a fee of £995.

Its best two-year fixed deal is priced at 5.44 per cent for those buying with a 40 per cent deposit, again with a fee of £995.

Clydesdale Bank It offers its “professional buy” mortgage at 5.29 per cent for those with a 15 per cent deposit.

Santander cut rates by up to 0.50 per cent and now has a 40 per cent deposit and a five-year fixed-rate purchase mortgage at 4.95 per cent, down from 5.10 per cent, with a £999 fee.

Barclays has reduced its two-year fixed product for those with a 40 per cent deposit from 5.88 per cent to 5.28 per cent, and this comes with a fee of £999.

A 25 per cent deposit mortgage on the same terms has been reduced from 5.93 per cent to 5.39 per cent.

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