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Mortgage wars heat up as Barclays, TSB and Coventry all cut rates

Emma Lunn
Written By:
Emma Lunn

Barclays, TSB and Coventry Building Society have all reduced rates on a range of mortgage products, while HSBC is offering its first 40-year mortgage term.

Barclays has reduced mortgage rates for existing residential and buy-to-let borrowers by between 0.1 and 0.2%.

The changes include a two-year fix at 60% loan to value (LTV) with a £999 fee. This has been reduced from 6.13% to 5.98%. The five-year fixed equivalent has been cut from 5.52% to 5.37%.

On its five-year fixed reward mortgage at 75% LTV and higher with a £999 fee, the bank has reduced the rate from 5.54% to 5.39%.

Meanwhile, its buy-to-let remortgage-only product, which is fixed for two years, has no fee and is available at 60% LTV has gone down to 6.5%, from 6.7%. The five-year fixed corresponding mortgage has gone down from 5.99% to 5.79%.

TSB has cut rates for two-year fixed house purchase and remortgage rates up to 75% loan to value (LTV) by 0.1%. Pricing begins from 5.94% and goes up to 6.54% at 75% LTV. Three-year fixed rate remortgages up to 75% LTV have also gone down by around 0.1%.

Meanwhile, Coventry Building Society has made a series of rate cuts across its mortgage products. For residential borrowers, this will include reductions across two-year fixed new business rates and reductions on most five-year fixed rates for new business customers.

Average rates falling as HSBC introduces 40-year term

The rate changes come just a week after HSBC, Nationwide, Santander and Virgin Money all announced rate cuts. Earlier in 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.

Data from Moneyfacts shows that the average two-year fixed residential mortgage rate now stands at 6.72%, down from 6.73%. The average five-year fixed residential mortgage rate is now 6.20%.

The mortgage rate cuts come as data suggests the housing market is starting to stall. According to Zoopla’s house price index, annual house price growth has slowed to its lowest level since 2012 at 0.1%, with both buyer demand and agreed property sales falling in August.

The report added that the number of agreed property sales is down by 20% and the flow of new supply has fallen by 9% compared to the five-year average in August.

This week also saw HSBC offer its first 40-year mortgage term as first-time buyers seek longer deals.

HSBC’s 40-year mortgage will be available through mortgage brokers from tomorrow while customers making direct applications will be able to apply from Wednesday 13 September.

Andrew Matson, head of mortgages at HSBC UK, said: “By extending the mortgage term we aim to help make mortgages more manageable with lower monthly repayments and homeownership a reality for our customers.”

Dean Butler, managing director for retail direct at Standard Life said: “Interest rates have rocketed since the middle of last year and so it’s understandable that people are looking for longer mortgage terms to ease the monthly strain. It won’t be possible, or even sensible, for everyone to stick to a shorter mortgage term, however it’s worth considering the potential retirement impact of any decision.

“There are obvious benefits to being mortgage-free in retirement itself, but additionally having the option to swap mortgage payments for pension contributions in those valuable years leading up to retirement can have a significantly positive impact on your pot, and as a result on your standard of living in retirement.”