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Mortgage wars: TSB and Barclays lead 2023’s rate cut finale

Mortgage wars: TSB and Barclays lead 2023’s rate cut finale
Matt Browning
Written By:
Matt Browning

TSB, Barclays and Gen H have announced another batch of mortgage rate cuts for home buyers.

After months of reductions – which YourMoney.com has coined the ‘mortgage wars’– high street providers and challenger banks alike have lowered rates across a range of products once again.

TSB commenced the drop in rates by reducing its three-year fixed first-time buyer and house purchase products at 90% to 95% loan to value (LTV), with prices starting from 5.74%.

The provider also snipped two-year fixes of a maximum LTV value of 75% by up to 0.05%. For borrowers looking for more from the bank, its additional borrowing range, residential two-year fixed rates up to 75% were clipped by 0.1%.

Data from Rightmove shows the average two-year fixed mortgage rate is 5.44% – a dip from 5.50% a year ago.

As well as its residential range, Barclays also capped off a year of mortgage rate cuts by introducing new prices on its select standard, premier, green home and mortgage guarantee scheme products.

Borrowers looking for a two-year fixed rate at 60% LTV can enjoy a 4.62% rate, which requires a £899 fee. There is also a fee-free alternative that’s been cut to 4.76%.

Meanwhile, the two-year fixed rate at 60% LTV has dropped to 4.8% with a £1,999 fee required.

Tipton and Coseley Building Society has got in on the act by lowering its five-year fixed residential purchase rate at 95% LTV to 5.64%. The deal comes with a £999 fee for borrowers to pay for.

Average five-year fix mortgage is down to 5.03%

This compares to the average five-year fixed mortgage rate price of 5.03% – down from 5.25% at this point in 2022.

For shorter-term deals, a three-year fix with the mutual at 95% LTV has been slashed to 5.74% which comes with a £999 fee and a £350 valuation cost too. However, a £250 cashback is included to put towards legal fees.

Gen H has cut its prices on a five-year 60% LTV fee-free homebuying bundle product to 3.94%, while the deal with fees included stands at 3.99%.

This is part of the fintech lender’s move to chip away at rates across all of its products by up to 0.15%.

Lenders may have space to make ‘chunkier cuts’ to mortgage rates

Matt Smith, Rightmove’s mortgage expert said: “Yet another week – the 21st in a row – of marginal percentage point drops to mortgage rates is positive news for home movers. Swap rates have also fallen further today following the early Christmas present of the lower-than-expected fall in inflation.

“The downward trajectory of swap rates has also been fuelled by a third consecutive base rate hold, and the markets’ belief that base rate could be cut as early as spring 2024.”

Smith added: “This may give lenders the space to make chunkier cuts to their mortgage rates in the short term. But it’s likely that lenders will wait to pass these on to borrowers until the new year, to take advantage of the seasonal jump in demand that usually happens in January.”