Four leading banks have reduced the interest rates on their mortgage products to kick off the new year. The Bank of England recently cut its base rate from 4% to 3.75%, benefiting many mortgage holders. Several lenders have followed suit by lowering their mortgage rates.
Lloyds Bank is currently offering the most competitive homebuyer mortgage deal at 3.47% for Club Lloyd customers, fixed for two years, and applicable to those with a 40% deposit, with a fee of £999. Meanwhile, Halifax is providing a rate of 3.74% for a two-year fixed-rate mortgage.
Barclays has introduced a 3.57% two-year fixed-rate mortgage with an £899 product fee for customers with a 40% deposit. Additionally, there is a 3.78% two-year fixed-rate offer for those looking to remortgage with 25% equity, which includes a £999 product fee.
HSBC has a 3.78% deal with a £1,008 fee and a 3.56% two-year fixed-rate option with a £999 product fee for customers with a 40% deposit. According to Moneyfacts, the average two-year fixed residential mortgage rate stands at 4.80% currently.
David Fell, the lead analyst at Hamptons, mentioned that the continuous decline in mortgage rates is attracting more buyers back into the market. With rates dropping below 3.5% early this year, potential sellers are reevaluating their options due to the reduced monthly cost of a new home. Even a slight decrease in rates can alleviate concerns about broader economic challenges.
There is a possibility of further reductions in mortgage rates this year if inflation surprises on the downside. Borrowers with tracker mortgages see their repayments adjust in line with the Bank of England base rate, usually tracking slightly above it. Standard variable rate (SVR) mortgages can change at any time, typically following the base rate trend. SVRs are generally more costly, while fixed-rate mortgages involve paying a set amount each month for a specified period before potentially moving to the lender’s SVR.
Homeowners nearing the end of a fixed-rate deal should compare rates and consult a mortgage broker to explore their options. Lenders typically allow securing a new deal around three months in advance. Should rates decrease, borrowers may have the opportunity to switch to a more affordable rate, but it’s advisable to check for any associated fees with the lender beforehand.