Mortgage costs have come down this week slightly as several high street lenders announced cuts to their offers. However, under 4%-deals have disappeared from the market.
The average two-year fixed mortgage rate now stands at 5.19%, slightly lower than the previous 5.2%, while a five-year deal has an average rate of 4.99%, a small drop from the previous 5.03%, according to figures from Uswitch.
Rob Clifford, chief executive at Stonebridge, said: “While the Bank of England has started to cut interest rates again, it’s clear from the data that most borrowers are yet to see the benefits from reduced borrowing costs.
Despite the gloomy outlook, some major lenders such as Barclays, NatWest and TSB made some cuts this week.
Simon Bridgland, director at Release Freedom, said: "Borrowers could be settling down with a bucket of popcorn this week as TSB are the second lender to wade into battle today with some cinematic reductions. It feels like sub-4% rates are looming on the horizon."
TSB has cut its three-year fixed first-time buyer and homemover deals by up to 0.22%. Two-year fixed rate remortgage deals in the 75% LTV and 85-90% LTV brackets have been cut by up to 0.4%.
Ben Perks, managing director at Orchard Financial Advisers, added: "Let’s see if other lenders join the festivities and spread more cheer as we head into the holiday season. Lenders are coming out swinging as they fight for business in the final few weeks of 2024."
HSBC mortgage rates
HSBC (HSBA.L) has a 4.15% rate for a five-year deal. This is unchanged from the previous week. For those that have a Premier Standard account with the lender this rate comes in at 4.12%.
Looking at the two-year options, the lowest rate comes in at 4.32% with a £999 fee, which is also unchanged.
Both cases assume a 60% LTV mortgage, meaning buyers need to have at least 40% for a deposit.
HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. The rates are much higher, however, with a two-year fix coming in at 5.85% or 5.36% for a five-year fix.
This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
NatWest mortgage rates
NatWest (NWG.L) is offering 4.1% for a five-year deal with a £1,495 fee, a cut from the previous 4.24%.
For a two-year fix, the cheapest deal comes in at 4.27%, also lower than last week’s 4.32%. In both cases, you'll need at least a 40% deposit to qualify for the rates.
Santander mortgage rates
At Santander (BNC.L) a five-year fix comes in at 4.14% with a £999 fee, assuming you have a 40% deposit — again, lower than the previous week’s 4.25%.
For a two-year deal, the cheapest customers can get is 4.21% with the same £999 fee, which is lower than the previous 4.30%.
Barclays mortgage rates
A five-year fix at Barclays (BARC.L) now comes in at 4.11%, lower than last week’s 4.18%. When it comes to two-year mortgage deals, the lowest you can get is 4.23%, unchanged from before.
Mark Arnold, head of mortgage and savings at Barclays, said: “Christmas can often be an expensive time of year, and the changes we are making are designed to help customers save money, whether they are homebuyers or homemovers. Introducing these new rates, with many offering a £0 product switching fee, will benefit our customers and may help to ease the financial burden involved in buying and moving house.”
Nationwide mortgage rates
Nationwide (NBS.L) is offering a five-year fix at 4.19%, which comes with a £999 fee and requires a 40% deposit. Same as the previous deal.
Nationwide offers a two-year fixed rate for home purchase at 4.34% with a £999 fee — also for borrowers with a 40% deposit. Again, unchanged from the previous week.
Halifax mortgage rates
Halifax, the UK’s biggest mortgage lender, offers a five-year rate for 4.12% (also 60% LTV), which is lower than last week’s 4.18%.
The lender, owned by Lloyds (LLOY.L) has a two-year fixed rate deal coming in at 4.23%, with a £999 fee for first-time buyers, which is unchanged.
It also offers a 10-year deal with a mortgage rate of 4.58%.
The lender has announced the launch of a new 1.5-year fixed-rate remortgage product in response to growing demand among borrowers for shorter term deals.
Shorter-term fixes offer certainty over monthly payments while also allowing households to switch to a new deal sooner to capitalise on lower rates.
Cheapest mortgage deal on the market
With mortgages below 4% no longer on the market, prospective homeowners are back to limited choices when it comes to finding a good deal.
NatWest has the cheapest deal on the market. However, its 4.1% offer requires a 40% deposit, so you will need a hefty amount of cash upfront to secure the deal. Barclays is close behind, offering a 4.11% deal for a five-year fix.
Given the average UK house price sits at £292,505, a 40% deposit equates to about £117,000.
Borrowers would need to spread their home loans over more than 70 years to afford the same mortgages on offer two years ago, banks have said.
There is also a new mortgage product promising to help first-time buyers get on the property ladder with a £5,000 deposit. The deal is offered by Yorkshire Building Society to buyers across England, Scotland and Wales, allowing them to purchase a property valued at up to £500,000.
This means first-time buyers could get on the ladder with as little as a 1% deposit.
Also, lender April Mortgages is offering buyers the chance to borrow up to six times their income on loans fixed for five to 15 years, from a deposit of 5%. Both those buying alone and those buying with others can apply for the mortgage.
The company, which is part of an independent Dutch asset manager DMFCO has interest rates starting at 5.20%, with an application fee of £195.
Skipton Building Society has also said it would allow first-time buyers to borrow up to five-and-a-half times their income, in an effort to support more borrowers on to the housing ladder.
Leeds Building Society is increasing the maximum amount that first-time buyers can potentially borrow as a multiple of their earnings, with the launch of a new mortgage range. Aspiring homeowners with a minimum household income of £40,000 may now be able to borrow up to 5.5 times their earnings.
Will mortgage rates go down in 2024?
Mortgage holders and debt borrowers have been forced to pay record-high repayments in recent years due to the UK's hiked base rate being passed onto customers by banks and building societies. Until now, the consensus was that interest rates have peaked and that 2024 will see rate cuts as inflation eases.
MPowered Mortgages' head of product, Peter Stimson, said: “The return of inflationary pressure means the Bank of England is likely to adopt a ‘wait and see’ approach on any further Base Rate reductions, not just in December, but in the immediate months following as well.
“While this was to a large extent expected, it doesn’t offer any relief to mortgage lenders and is unlikely to allow them to reduce the interest rates they offer to new customers in the run up to Christmas.”
About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.
