A raft of providers made hefty mortgage rate cuts this week including Santander who cut prices below 4%.
High-street banks are jostling to attract a range of homeowners and borrowers, meaning rates have plummeted to their lowest level since June last year,
Last week, HSBC announced huge reductions but Santander takes the headlines this time with an eye-catching rate of 3.89%.
Homeowners wanting to remortgage their property with the lender can enjoy that rate for a 60% loan to value (LTV) with a £999 fee. Alternatively, home buyers may wish to take up the purchase option priced at 3.94%.
It’s part of a move which cut all standard fixed rates for new residential borrowers between 0.17% and 0.82%. Exclusive fixed rates for new build properties will also slide down by up to 0.56% with bigger fixes dropping by 0.25%.
In the fixed rate market, two and five-year deals for buy-to-let borrowers will decrease between 0.21% and 0.56% too.
Santander goes below 4% with Barclays not far behind
Meanwhile, Barclays has announced hefty reductions on residential purchase products by 0.5%, with one offer now available for 4.1%.
That was the case for its two-year fixed deal that finances up to 60% of your property, which also comes with a £899 fee to pay. For a bigger LTV, there is a two-year fix at 75% (also with a £899 fee) on the market for 4.27% – a drop from 4.7%.
A fee-free option is on offer up to 60% LTV, priced at 4.36% while the 75% LTV is down to 4.38% from 4.86%.
This compares to the average two-year fixed residential mortgage rate which stands at 5.71%, according to Moneyfacts data. A five-year fix equivalent is 5.31%.
Rate drops of up to 0.5% are available for green home products as well as for borrowers utilising the mortgage guarantee scheme.
A two-year fix at 95% LTV has fallen from 5.8% to 5.5% and the five-year version which was previously available for 6.67% is now 6.27%.
Not to be left behind, Coventry Building Society has joined its rivals in cutting all fixed-rate products by as much as 0.57%. The mutual has also cut buy-to-let products by 0.39% on some deals.
Long-term nature of mortgage rate cuts ‘remains to be seen’
Deals to consider for borrowers include a two-year fix at 75% LTV, with a £999 fee to pay, for a rate of 4.61%. It is also open to those remortgaging who get a choice of £350 cashback or use of the provider’s remortgage transfer service.
If you prefer a longer term, a five-year fix purchase at 90% LTV is on the market with a rate of 4.84%. However, this deal requires customers to pay £999 in fees.
Looking ahead to 2024, Alex Hasty, director at Compare the Market, said: “Customers may now be able to secure rates below 4% and those looking to move home or remortgage can consider taking advantage of this. However, whether this is a long-term trend remains to be seen.
“With the UK’s inflation and interest rate trajectory still uncertain, we could see continued volatility in the rates that providers are able to offer to new and existing customers. For those looking to move home or remortgage, comparing available deals now and staying aware of what is happening in the market could help you prepare and save for the future.”
