Table of Contents
- The lowest five-year fixed mortgage rate has fallen from 4.28% to 3.83% since July 1
The mortgage rate war continues to rage, with Barclays, HSBC and TSB among the latest lenders to slash home loan prices.
This comes after weeks of rate cuts that saw the lowest five-year fixed mortgage rate fall from 4.28 percent to 3.83 percent since the start of July.
Meanwhile, the lowest two-year fixed rate fell from 4.68 percent to 4.22 percent during that period.
Three in one day: Three major lenders announced interest rate cuts starting tomorrow
However, although there are now eight lenders offering five-year fixed rates below 4 percent, mortgage offers are still much higher than many borrowers are used to.
According to UK Finance, around 700,000 fixed-rate contracts are expected to expire in the second half of this year. Many of these will be at interest rates of around 2% or less.
And although the lowest rates have fallen below 4 percent, the average market fixed rate remains above 5 percent.
In fact, the average five-year fixed mortgage rate is currently 5.27 per cent and the average two-year fixed rate is 5.64 per cent, according to rates watchdog Moneyfacts.
What will change tomorrow?
Starting tomorrow, HSBC will be making a series of rate cuts across its fixed-rate products aimed at home-movers, first-time buyers, homeowners and people refinancing their mortgages.
Although rates won’t be made public until tomorrow, borrowers can expect to see improvements across a broad spectrum of deals, including two-, three- and five-year fixed deals.
Rate cuts will not only benefit those with the largest deposits, but also look set to benefit those buying with 5 or 10 per cent deposits.
Nicholas Mendes, mortgage technical manager at broker John Charcol, believes HSBC’s cuts may include better buying from tomorrow.
“HSBC’s recent decision on repricing is not a surprise as it follows similar actions by other major lenders in the sector,” Mendes said.
‘Given the competitive nature of the mortgage market, it was only a matter of time before HSBC adjusted its rates in response to broader market trends.
‘This move is strategically aligned with the bank’s efforts to remain competitive and potentially position itself as a new best buy.’
TSB has also announced cuts of up to 0.25 percentage points on its two-, three- and five-year fixed-rate deals aimed at homeowners, home movers and first-time buyers, with new rates starting tomorrow.
Justin Moy, managing director of EHF Mortgages, told Newspage: ‘TSB is doing a great job at the moment.
‘Further cuts in mortgage rates will be welcome news for borrowers as the market looks to encourage more activity for home buyers and first-time buyers, improving affordability and keeping the housing market turning.
‘Those looking to refinance will have to be patient as rates will eventually recover, but with housing transaction numbers subdued, lenders are clearly keen to go further where possible.’
Barclays will also cut rates on some domestic product transfer transactions from tomorrow despite already offering some of the best deals on the market.
Currently, its lowest five-year fixed rate is 3.84 per cent, with a fee of £899. On a £200,000 mortgage to be repaid over 25 years, that would mean paying £1,038 a month.
That said, Barclays is also withdrawing three of its products aimed at home-movers, including its 4.14 per cent five-year fixed rate for those buying with a 25 per cent deposit and its 4.37 per cent five-year fixed rate for those buying with a 15 per cent deposit.
