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Mortgage war heats up as HSBC, Nationwide, Santander and Virgin Money all announce rate cuts

Nick Cheek
Written By:
Nick Cheek
Posted:
Updated:
23/08/2023

Over the past fortnight, major lenders and their smaller rivals have started cutting mortgage rates. Now more major names have joined the race to cut.

In early August, YourMoney.com reported that high street brands such Barclays, NatWest and Skipton Building Society had cut rates with fellow large lenders Halifax and TSB following suit soon after.

Now two more major banks have announced they are trimming their rates with mutuals and more specialist brands following in their wake.

Today, HSBC announced it had lowered rates on some first-time buyer and buy-to-let mortgages.

For example, in its residential remortgage range, two and five-year fixed rates up to 85% loan-to-value (LTV) have been reduced, with 10-year fixed rates up to 80% LTV also falling. Its five-year fixed fee-saver deals up to 90% LTV have also been cut.

More changes effective from today include two and five-year fixed fee-saver purchase products up to 75% LTV falling to 6.54%.  Buy-to-let remortgage products have also dropped, with two-year fixed fee-savers at 65% LTV standing at 6.44 per cent.

Virgin drops rates

Virgin Money joined the party by declaring a range of purchase and remortgage exclusives, plus a reduction in selected core and product transfer rates by up to 0.2%.

The lender has moved to attract buyers looking for more expensive loans worth over £1m. Exclusives for purchases worth £1m or more include its two-year fixed rate at 75% LTV at 6.41% and five-year fixed rate at the same LTV tier for 5.79%. These offers cost £1.995 for the privilege.

Other purchase exclusives include free valuations and £1,000 cashback, with its two-year fixed rate at 90% LTV costing 6.6% and five-year fixed rate at 85% LTV coming to 5.63%. However, both deals will cost buyers £495.

Richard Walker, head of intermediary sales at Virgin Money, said: “Virgin Money has launched new purchase products for loans of between £1m – £2m.

“For customers requiring a larger loan, our team of BDMs have access to a dedicated underwriting team to help with or to discuss an application which is complex or doesn’t meet our standard lending criteria.”

Nationwide ‘building on the reductions made in recent weeks’

Earlier this week, Nationwide announced cuts to fixed mortgage rates by up to 0.4%. New borrowers moving home will benefit the most from the mutual’s range, which includes a fee-free five-year fix at 60% loan to value (LTV), down from 5.79% to 5.39%.

Henry Jordan, director of home at Nationwide Building Society, said: “As economic conditions continue to stabilise, we are able to make further cuts to our mortgage rates, building on the reductions we have made in recent weeks.”

Santander also cut rates for its buy-to-let and residential ranges. These include fixed rates going down by between 0.02% and 0.2% for residential ranges, while certain buy-to-let rates will go down by between 0.04% and 0.2%.

Aldermore has also reduced rates on its buy-to-let and residential owner-occupied mortgages for both new and existing customers.

Cuts went up to 0.5% for its buy-to-let range for individual and company landlords with single residential investment properties rates beginning from 6.59% at 75% LTV for both two and five-year fixed rates.

Mortgage rates heading in ‘positive direction’

Jon Cooper, head of mortgages at Aldermore said: “Our core purpose is to help people go for it in life and our rate reductions offer something for everyone, whether it’s landlords, home movers, existing homeowners wanting to remortgage or those looking to get on the property ladder for the first time.

After the latest round of announcements, it’s clear mortgage rates are falling on all types from residential to buy-to-let. According to data from Rightmove, the average five-year fixed mortgage rate is 5.79%, down from 5.86% last week.

Reflecting on the rate decreases, Rightmove’s mortgage expert Matt Smith said: “The positive direction for rates continues this week albeit a little more slowly, with five-year rates edging down slightly more than two-year equivalent products. Swap rates are broadly flat week-on-week in response to a range of economic indicators published last week, but we should get more sense of any impact in the coming days.

“We are likely to see a continued period of stability for home-movers at least for now, and while the market remains sensitive to any surprises, it appears that lenders will continue to price competitively where they can.”