Price war erupts as six of seven major mortgage lenders slash rates

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A worth war has erupted between Britain’s largest morgage lenders after a number of banks slashed rates to under 4 per cent, in a big enhance for householders.

Barclays and Santander have been the newest to chop the associated fee of fixed-rate offers rates this week by as much as 0.82 share factors.

Santander reduce some of its five-year fastened mortgage offers all the way down to under 4 per cent, becoming a member of the Yorkshire Building Society, First Direct, Co-operative Bank, Virgin Money and HSBC.

The discount in prices will come as welcome reduction to the 1.6 million debtors who’ve cheaper fixed-rate offers which might be expiring this 12 months and face paying greater prices.

Six of Britain’s seven largest mortgage lenders have now reduce rates because the begin of the 12 months, together with the nation’s largest lender Halifax, which reduce rates on Thursday.

Daryl Doffer, a dealer from Mortgage Expert advised The Independent: “The elusive mortgage lenders, once titans of stoicism, have engaged now in a price war, slashing rates below 4 per cent.

“But are these siren songs triggering a stampede of homebuyers – it might be too early for that just yet. Consumers are still interested in seeing how far the low-interest buffet extends, with some dipping their toes into the market and making tentative enquiries.

“The market is creeping back to life, with a slow uptick in activity – long may this continue.”

In a report launched earlier this week, the monetary data service Moneyfacts mentioned that common mortgage rates on two- and five-year fastened fee offers fell for a fifth consecutive month.

Between the beginning of December and the beginning of January, they drto 5.93 per cent and 5.55 per cent – the final time these have been under 6 per cent was in June 2023.

The common two-year fastened fee stands 0.38 per cent greater than the common five-year equal, Moneyfacts mentioned, however in response to some mortgage brokers, we’re not distant from a two-year fastened fee mortgage under 4 per cent.

Stephen Perkins, managing director at Yellow Brick Mortgages, advised The Independent: “The sub-4 per cent two-year fixed rate should be imminent. Lenders are keen to get 2024 off to a positive start towards their lending targets after a lacklustre 2023 and the markets seem confident in a base rate reduction by mid-year.

“The next inflation data could be the Rosetta Stone to unlocking two-year fixed deals starting with a [figure] three.”

It shouldn’t be sure for the time being how a lot rates will fall and far will depend upon what the Bank of England determine to do with curiosity rates, that are at the moment set at 5.25 per cent.

Further reductions in curiosity rates by the BoE are solely more likely to happen if the present inflation stage of 3.9 per cent reduces additional to the two per cent goal.

Riz Malik, founder and director at R3 Mortgages, mentioned: “There needs to be some serious evidence of inflation continuing its trajectory to 2 per cent before we see rates going much lower than what many lenders will release in the first two weeks of January. These rate cuts are great but not guaranteed indefinitely, especially given the current geopolitical backdrop.”

However, the repricing from major banks does seem to have led to a lift within the property marketplace for folks remortgaging or getting on the housing ladder.

Kylie Ann Gatecliffe, director at KAG Financial, mentioned: “New year, new mortgage is definitely the trend we are seeing. From the minute we returned to the office in January, we have had an influx of enquiries from customers either wanting to make a property move or looking at remortgaging.

“Now rates are starting to come down and look more favourable, this has boosted confidence for customers to move forward. With rates still falling, this will hopefully keep the momentum building and get the property market back on track.”