Four major banks have recently reduced interest rates on their mortgage products as part of a new year initiative. Following a Bank of England base rate decrease from 4% to 3.75% in December, many mortgage lenders have been adjusting their rates downwards.
Lloyds Bank is currently offering the lowest homebuyer mortgage rate on the market at 3.47% for Club Lloyd customers, fixed for two years, and available to those with a 40% deposit, accompanied by a £999 fee. Halifax has set a rate of 3.74% for a two-year fixed-rate mortgage.
Barclays has introduced a 3.57% two-year fixed-rate mortgage with an £899 product fee for customers with a 40% deposit. Additionally, there is a 3.78% two-year fixed-rate option for those looking to remortgage with 25% equity, which comes with a £999 fee.
HSBC is offering a 3.78% deal with a £1,008 fee and a 3.56% two-year fixed-rate mortgage with a £999 product fee for customers with a 40% deposit. The average two-year fixed residential mortgage rate currently stands at 4.80% according to Moneyfacts.
David Fell, lead analyst at Hamptons, noted that the decreasing mortgage rates are enticing more buyers back into the market. With monthly mortgage payments being a significant expense for homeowners, even slight rate reductions can alleviate concerns about broader economic challenges. Fell also mentioned the potential for further rate drops this year if inflation surprises on the downside.
For mortgage holders, the type of mortgage deal they have, such as tracker, standard variable rate (SVR), or fixed rate, determines how their repayments may change. It is advisable for individuals whose mortgage deals are expiring to compare rates and consult with a mortgage broker to explore available options. Lenders typically allow securing a new deal about three months before the current one ends, and borrowers should be aware of any potential fees associated with switching to a new deal.