Mortgage News: Halifax Extends Help For First-Time Buyers, As Lenders Continue To Cut Rates

Find out what’s happening with today’s mortgage rates and calculate monthly repayments across a range of different rates and deals.

29 August: TSB Among Latest Lenders To Peg Down Mortgage Costs

TSB has cut selected mortgage rates for new customers by up to 0.45 percentage points, writes Jo Thornhill. The lender is hot on the heels of a string of other major lenders to reduce costs this week.

The lender has reduced two- and three-year residential remortgage fixed rates and also cut selected buy-to-let fixed rates by up to 0.15 percentage points.

At the same time it has reduced a range of its residential product transfer fixed rate deals, for existing customers, by up to 0.5 percentage points. All new rates and deals will be live on TSB’s website and available through brokers from tomorrow (30 August).

Clydesdale Bank, part of Virgin Money group, has cut selected two and five-year fixed rate deals by up to 0.46 percentage points, effective from 30 August.

The lender is offering a five-year fixed rate for remortgage, exclusively through brokers, at 3.99% with a £1,499 fee, for borrowers with at least 35% equity in their property (65% LTV).

Precise Mortgages, the specialist lender who can help non-standard borrowers (such as those with bad credit or irregular income), has relaunched its residential loan range and slashed the cost of deals by up to 1.05 percentage points.

Five-year residential fixed rates up to 75% loan to value start from 5.19% with a 1% fee. Precise has also cut BTL fixed rates by up to 0.25 percentage points.

Lloyds Bank and Halifax, which are part of the same banking group, have launched a new ‘first-time buyer boost’, which allows buyers with lower household incomes and smaller deposits to borrow up to 5.5 times gross annual income.

To qualify for the maximum income multiple, borrowers need to apply for a first-time buyer mortgage with Lloyds or Halifax, have a total household income of at least £50,000, plus a cash deposit of at least 10% of the purchase price (90% loan to value).

Previously the banks would only lend 5.5 times income when households earned a gross £75,000 and only up to a maximum of 75% of the property value.

Broker Nick Mendes at John Charcol said: “Halifax’s lower income threshold of £50,000, along with its competitive criteria and rates, demonstrates how lenders are continually adapting to attract borrowers, making it a strong choice for many first-time buyers.”

The ‘boost’ offer isn’t available on shared ownership or shared equity mortgage loans.

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28 August: Virgin Money and MPowered Announce Further Reductions Despite September Bank Rate Cut ‘Looking Unlikely’

Virgin Money has cut selected fixed rate deals by up to 0.28 percentage points, effective from tomorrow, 29 August, writes Jo Thornhill.

MPowered Mortgages has also reduced a range of its fixed rate mortgage deals. It marks its fourth rate cut this month and takes the lenders total reductions in August to 0.36 percentage points.

Competition in the fixed rate mortgage market has intensified over the past week as lenders have made significant cuts to the cost of borrowing, including pushing five-year fixed rates under 4% for the first time in at least six months (see stories below).

Virgin’s latest cuts predominantly effect purchase deals, available through brokers, at higher loan to value ratios.

It is offering a two-year fixed rate at 4.74% with a £999 fee for borrowers with a 15% cash deposit (85% LTV), for example, and a five-year purchase deal at 4.32% with a £999 fee at 80% LTV.

Other highlights include a five-year deal for purchase at 5.14% for borrowers with just a 5% deposit (95% LTV). This deal has no product fee and includes £300 cashback on completion.

The lender has also cut some selected buy-to-let (BTL) rates by up to 0.14 percentage points, and BTL and residential product transfer deals by up to 0.15 percentage points, for existing customers. The lender is offering a five-year fixed BTL deal for purchase (60% LTV) at 3.88% with a 3% fee.

MPowered Mortgages has focused its reductions on a number of core residential borrowing deals for two, three and five-year fixed rates between 60% loan to value and 80% LTV.

Among its new deals, available through brokers, is a two-year fixed rate for purchase at 4.57% with a £999 fee and a fee-free five-year fixed rate for remortgage at 4.30%. Both deals require a 40% deposit.

However, despite continued cuts to fixed rates across the market, experts predict the Bank of England’s Monetary Policy Committee won’t reduce interest rates at its next meeting on 19 September, having cut Bank Rate from 5.25% to 5% on 1 August.

This is largely due to a small rise in inflation this month, which was recorded at 2.2% in the year to July, up from the Bank’s target 2% in June.

Stuart Cheetham, chief executive at MPowered Mortgages said: “Looking ahead, we don’t expect any significant changes in mortgage rates in the short term given, that a September cut in the Bank of England Bank Rate now seems unlikely and future potential cuts are already priced in.”

22 August: Small Deposit Mortgages Benefit From Reductions

Yorkshire building society has cut selected fixed rate deals by up to 0.2 percentage points, following the lead of other major lenders who have slashed rates this week, writes Jo Thornhill.

Halifax for Intermediaries has also reduced the cost of selected residential remortgage deals. The new rates include a five-year fixed rate at 4.02% and a two-year equivalent deal at 4.37%. Both deals have a £999 product fee and require borrowers to have 40% equity in their home (60% loan to value).

Among Yorkshire’s reductions is a cut to the cost of its £5,000 deposit mortgage for first-time buyers from 6.39% to 6.24%. The five-year fixed rate deal has no fee and is available for FTB buying a property worth up to £500,000 with a minimum £5,000 cash deposit.

Other highlights include a two-year fixed rate for remortgage at 4.39% with a £1,495 fee for homeowners with 25% equity in their property. An equivalent three-year deal is available at 4.34% (also 75% LTV).

There is also a five-year fixed rate for home purchase for buyers with a 10% cash deposit at 5.24%. There is no product fee and buyers will get £2,000 back on completion.

Accord, part of Yorkshire building society, has cut residential fixed rates by up to 0.35 percentage points. It has a five-year fixed rate for home purchase at 4.3% with a £1,999 fee, available to borrowers with at least a 25% cash deposit, plus a a three-year purchase deal at 4.92% with a £999 fee for borrowers with at 20% deposit.

Leeds building society has reduced fixed rates for new and existing customers by up to 0.35 percentage points. Among the highlights is a five-year fixed rate deal for residential purchase or remortgage at 4.09% for new customers with at least a 25% deposit or equity (75% LTV). The deal has a £999 fee, or there is a fee-free option at 4.22%.

Furness building society has cut residential and BTL fixed rates by up to 0.35 percentage points. It is offering a five-year fix for residential purchase and remortgage at 4.54% with a £999 fee (80% LTV) and a two-year deal at 5.99% at 95% LTV, also with a £999 fee.

August 21: Building Society Now Offering Cheapest Five-Year Fixed Rates For New And Existing Customers

Nationwide building society has announced further reductions to its fixed rate mortgages, to offer a market-leading five-year fixed rate priced at 3.78%, writes Jo Thormhill.

The deal, for residential home purchase, has a £1,499 fee and is only available to home buyers with a 40% cash deposit (60% loan to value) who are borrowing a minimum loan amount of £300,000. It marks a reduction of 0.26 percentage points on its previous equivalent deal.

Brokers are waiting to find out if lenders – in particular Barclays, HSBC and NatWest – respond by also reducing fixed rates further. The high street lenders have been battling it out at the top of the five-year fixed rate best buy tables for the past week.

Nationwide has also reduced remortgage rates to offer the first sub-4% deal since February this year. The five-year fix at 3.99% (60% LTV) comes with a £999 fee and is market-leading.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the deal was ‘great news’. He said: “Until now, lenders have been targeting home movers with sub-4% rates but competition among the ‘big six’ lenders is driving rates lower and now those remortgaging are also seeing the benefit.

“With markets expecting further rate cuts, we could see a 3.5% five-year fix by Christmas, which will be a massive psychological boost for the market.”

Among its other new deals Nationwide is offering a two-year fixed rate for purchase at 4.15% with a £999 fee at 60% LTV. There is also a five-year rate at 4.09% for house purchase, with no product fee, at 75% LTV.

Nationwide has cut product transfer deals for existing customers by up to 0.25 percentage points and deals for existing customers looking to move home by up to 0.26 percentage points.

Nick Mendes, broker at John Charcol commented: “Nationwide has pulled out all the stops with their latest rate cuts, making a bold statement in the mortgage market by slashing rates. This positions them as a strong competitor, particularly with their lowest rate now at an impressive 3.78%.

“Whether you’re a new or existing customer, first-time buyer, or looking to remortgage, Nationwide is offering competitive rates across the board.”

Earlier in the day HSBC unveiled its latest fixed rate mortgage deals after announcing rate cuts yesterday (see stories below).

The lender is offering a five-year fixed rate for residential purchase priced at 3.81% with a £1,499 fee. However, the deal is only available to HSBC Premier banking customers who have at least a 40% deposit (60% LTV).

The bank’s equivalent five-year fixed rate for purchase, which is open to all borrowers, is now priced at 3.84%. But this is now trumped by Nationwide’s five-year fix at 3.83% with a £999 fee.

NatWest is offering a deal for home purchase at 3.83% with a £1,495 fee, and Barclays has a similar deal at 3.84%, but with a lower £899 fee.

NatWest also made further rate reductions, which will come into effect from tomorrow (22 August). Among the new deals is a five-year fixed rate for remortgage at 4% with a £1,495 fee (60% LTV) and a fee-free two-year fixed rate for remortgage at 4.75% (60% LTV) with £250 cashback on completion.

But at the same time the bank has increased the cost of selected deals across higher loan to value ratios. For example, its two-year fixed rate for home purchase at 90% LTV has been pushed up from 5.23% to 5.35%. This deal has a £995 fee. The bank’s five-year fee-free fixed rate for remortgage, also at 90% LTV, is now priced at 5.23%, up from 5.18%.

20 August: HSBC Poised To Challenge Cheapest Five-Year Rates

Barclays, HSBC and TSB have all announced fixed rate cuts as competition in the mortgage market intensifies, writes Jo Thornhill.

HSBC said it will make rate cuts across a broad range of fixed rate deals, available through brokers, at various loan to value (LTV) ratios.

The extent of the reductions as well as the new deals will be unveiled tomorrow, when they will also take effect but brokers expect them to be highly competitive. HSBC is already offering a five-year fixed rate for home purchase at 3.95% with a £999 fee at 60% LTV.

In the last week, both Nationwide building society and NatWest have cut their equivalent deals to 3.83% (see stories below), which may have prompted this latest repricing by HSBC to move closer to the best buys.

Nick Mendes, a mortgage broker at John Charcol said: “HSBC’s recent repricing move comes as no surprise, following similar actions from other major high street lenders. Given the competitive nature of the mortgage market, it was only a matter of time before HSBC adjusted its rates in response to the broader market trends.

“This move is strategically aligned with the bank’s efforts to remain competitive and potentially position itself as a new best-buy.”

TSB has made further rate cuts of up to 0.25 percentage points across its residential borrowing range, also effective from 21 August. It follows its announcement of cuts across standard residential mortgages, available through brokers of up to 0.2 percentage points, which the bank made just yesterday.

But while many lenders are battling for the lowest rates in the 60% loan to value ratio bracket, TSB has focused its efforts in being more competitive at higher LTVs.

For example, its five-year fixed rate for first-time buyers and home movers with a 20% cash deposit is currently at 5.04% with a £995 fee. But this could fall to 4.79% if the deal receives the full 0.25 percentage point cut tomorrow.

TSB will unveil its latest rates and deals online tomorrow (21 August).

Barclays has cut selected residential fixed rate deals by up to 0.15 percentage points for existing borrowers with at least a 15% equity (85% loan to value). It is offering a product transfer five-year fixed rate deal at 4.79% with a £999 fee.

The Mortgage Works, the specialist lending arm of Nationwide building society, has cut selected buy-to-let fixed rates by up to 0.1 percentage points effective from 21 August. It is offering a one-year fixed rate for standard BTL purchase or remortgage at 3.49% with a 2% fee, for landlords with at least 25% equity in their investment property (75% LTV). It also has a five-year fixed rate at 4.29% (also at 75% LTV) with a £1,495 fee or a two-year equivalent deal at 4.64%.

19 August: NatWest Cuts Five-Year Fix To Match Nationwide’s Leader

NatWest has reduced the rate on its five-year fixed rate for home purchase from 3.89% to 3.83% to rival the same market-leading deal offered by Nationwide Building Society, writes Jo Thornhill.

Both deals are available to home buyers and movers with at least a 40% deposit. But NatWest’s offering must be applied for and managed exclusively through the lender’s website and is not available through mortgage brokers. It comes with a £1,495 arrangement fee.

Nationwide’s 3.83% five-year fixed rate for home purchase has a £1,499 fee and minimum lending requirement of £300,000. It is available both direct and through brokers.

Elsewhere, TSB has cut the cost of its fixed rate deals by up to 0.35 percentage points on its affordable housing mortgage ranges, and by up to 0.2 percentage points across residential purchase and remortgage deals.

The bank is offering a five-year fixed rate for remortgage at 4.89% (with a 25% deposit) with a £995 fee and a two-year equivalent deal at 5.34%.

TSB’s three-year fixed remortgage rates now start at 4.58% with a £999 fee or 4.78% with no fee (both deals at 60% LTV).

Virgin Money has lowered selected buy-to-let fixed rates, available through brokers, by up to 0.15 percentage points, effective from 20 August. It is offering a five-year fixed rate for BTL remortgage at 4.31% for borrowers with at least 40% deposit (60% LTV) with a £2,195 fee. The bank is also offering a similar five-year fix for BTL purchase or remortgage, but with a 3% product fee, priced at 3.90% (60% LTV).

The lender has also cut BTL product transfer rates, for existing customers looking for a new deal, by 0.15 percentage points. Five-year fixed rate deals with a £995 fee (at 60% LTV) start from 4.17%.

Halifax has cut its product transfer rates for existing customers, including deals for further advance, by up to 0.32 percentage points. The new rates and deals, available through brokers, will be unveiled and effective from 20 August.

14 August: Competition Between Lenders At Its ‘Most Intense For 30 Years’ Say Brokers

MPowered Mortgages and Clydesdale Bank, part of Virgin Money group, are the latest lenders to cut fixed rate deals as the latest housing market and inflation data reveals an increasingly positive outlook, writes Jo Thornhill.

MPowered Mortgages has cut selected two, three and five-year fixed rate deals, up to 80% loan to value, by up to 0.22 percentage points. Among its deals, available through brokers, the lender is offering a five-year fixed rate for home purchase at 4.01% with a £999 fee for borrowers with at least a 40% cash deposit.

The lender’s two-year fixed rates for remortgage start from 4.6% with a £999 fee (at 60% LTV). It has also cut its standard variable rate, the rate all customers revert to after their fixed rate period ends unless they switch to a new deal, from 8.74% to 7.49%.

Clydesdale Bank has cut selected two and five-year fixed rates, available through brokers, by up to 0.3 percentage points, effective from Thursday (15 August). It is offering five-year fixed rate deals for home purchase from 4.11% with a £999 fee (65% LTV). Broker exclusive remortgage deals start from 4.37% for a five-year fixed rate.

The reductions are the latest of several made by major lenders in the past few days and weeks, as signs point towards a stabilising market.

Data published today by the Office for National Statistics (ONS) showed that annual inflation in July climbed less than many expected to 2.2% (from its target 2% in June), while house prices rose by 2.7% – the fourth consecutive annual rise.

The Bank of England cut interest rates on 1 August from 5.25% down to 5%.

Peter Stimson at MPowered Mortgages commented: “The current lending environment is nothing short of cut-throat. Competition between lenders is the most intense I have seen in the last 30 years.”

13 August: Rates On Longer-Term Fixes Edge Down To 3.83%

Nationwide building society has trimmed the cost of its fixed rate mortgage deals by up to 0.2 percentage points, creating a new five-year fixed deal for home movers priced at leading 3.83%, writes Jo Thornhill.

The mutual’s new deals, available from tomorrow (Wednesday,14 August), include lower rates across its two, three, and five-year fixed rates for residential borrowing.

It follows significant rate cuts by major lenders in recent days, including Halifax, NatWest, HSBC, first direct and Virgin Money (see stories below).

To date, the lowest five-year rate for home purchase, available from Barclays, had been cut to 3.84% (or 3.83% for Premier current account customers) for borrowers with at least a 40% cash deposit for a £899 fee.

But Nationwide has pushed its way to the top of the rate tables with the new deal which is available to new and existing customers moving home with a 40% deposit. However, the 3.83% rate must be set against a higher fee of £1,499 and a minimum lending requirement of £300,000.

Virgin is still offering the most competitive five-year fix for smaller deposits with its 4.99% deal available at a 75% loan-to-value and a £995 fee.

Among its other new deals, Nationwide is offering a five-year fixed rate for remortgage at 4.2% and an equivalent two-year deal at 4.57%, both of which charge a £999 fee and require a 40% deposit.

Co-operative Bank for Intermediaries has cut two and five-year fixed rates for residential purchase and remortgage, effective from Thursday (15 August).

The bank is currently offering (before its rate cut) a five-year fixed rate for purchase or remortgage at 4.32% with a £999 fee (60% loan to value) and a two-year equivalent deal at 4.74%. The bank’s new rates and deals will be unveiled on Thursday.

Aldermore has cut its fixed rates by up to 0.5 percentage points on its residential deals and by up to 0.2 percentage points for buy-to-let (BTL) borrowers.

It is also launching two and three-year fixed rate limited edition residential deals with a one percentage point discount off its reversionary rate (currently at 6.23% up to 80% LTV and 6.98% up to 90% LTV).

Among its other residential deals Aldermore is offering a fee-free five-year fixed rate deal for home purchase or remortgage for borrowers with at least a 25% cash deposit (75% LTV ) at 5.34%.

For BTL landlords with single residential investment properties, Aldermore has a two-year fixed rate deal for purchase and remortgage at 5.09% (75% LTV) with a 3% product fee.

12 August: NatWest Unveils 3.89% Broker Deal With Hefty Fee

Home purchasers looking to fix their rate for the next five years will have a greater choice of sub-4% deals from tomorrow, writes Laura Howard.

NatWest and Virgin are entering the frame with competitive deals following moves by HSBC and its subsidiary first direct to breach the 4% barrier last week (see stories below).

Virgin will peg down five-year fixed-rate cost by 0.21 basis points to create a 3.99% deal with a £995 fee. The deal requires a minimum deposit of 25%, not the 40% required by its competitors. It also offers buyers £300 cashback.

NatWest has decreased the cost of its five-year fix (via brokers) by 14 basis points to a cheaper 3.89% but with a higher fee of £1,495. Last week it launched a non-broker 5-year deal at 3.97%, again with a 40% deposit required.

Nicholas Mendes at broker John Charcol commented: “Virgin’s launch of a 3.99% mortgage at 75% loan to value marks a significant moment in the current mortgage market. When lenders feel secure about the economic landscape, they can price their mortgages more competitively, as we’re seeing now.

“This move by Virgin could trigger a chain reaction among other high street lenders, not just in terms of rates but also in lending criteria, which could become the next area of competition.”

Virgin is also pegging down the cost of selected remortgage fixed rates by up to 0.20 percentage points. It means that two-year fixed rates will start from 4.40% (for a £995 fee), while the fee-saver equivalent will be reduced by 0.18 basis points, starting at 4.77%. Both deals will require a 40% deposit.

Santander has also confirmed it will peg down costs of selected residential fixed rate mortgages for new customers from tomorrow, by up to 0.19%.

For existing customers looking to transfer to a new deal, costs will be cut by up to 0.27%.

Buy-to-let mortgage costs will be cut by up to 0.15% for both new and existing customers, while the cost of more specialist new-build mortgage deals for new customers will also be slightly trimmed by up to 0.07%.

The final costs of the respective deals will be confirmed tomorrow when Santander will also introduce a new 10-year fixed deal, available for both purchase and remortgage.

As well as its reduced 5-year fixed rate, NatWest announced a raft of other cuts to its new business range. They include 20 basis points off the cost of its two-year fixed rate for purchases down to 4.28%. The deal requires a 40% deposit and comes with a £1,495 fee.

The three banks are the latest in a line of lenders to reduce rates and introduce new cheaper deals following the cut in interest rates from 5.25% to 5% on 1 August.

9 August: 5-Year Fix Requires 40% Deposit, £999 Fee

HSBC, one of the UK’s biggest mortgage lenders, has launched a sub-4% deal in response to similar moves by NatWest and Nationwide last week.

At 3.95%, HSBC’s five-year fixed-rate offer is among the cheapest currently available (see first direct offer later in this story), prompting speculation that other lenders will follow suit in the wake of the cut to the Bank of England Bank Rate – from 5.25% to 5% – at the beginning of this month.

Nicholas Mendes at broker John Charcol said: “This puts HSBC in a prime position in the market. Next, we expect similar moves from Santander, Halifax, and Barclays. August has started with strong competitive momentum.”

The HSBC deal requires a substantial deposit along with a booking fee, although cashback is also available on completion for some categories of borrower.

To get the 3.95% rate, first-time buyers with 40% deposit (60% LTV) must pay a £999 fee. Cashback is £350.

First-time buyers able to access HSBC’s Energy Efficient Homes (EEH) mortgage range who have the same deposit and pay the same fee qualify for £1,600 cashback.

For home movers with a 60% deposit, the fee is £999 but there is no cashback payable on standard mortgages, but EEH deals on these terms attract cashback of £1,250.

Existing customers borrowing more or switching loan with 60% deposit will pay £999 but receive no cashback.

HSBC subsidiary first direct has announced mortgage rate reductions of up to 0.30 percentage points, reducing interest rates across its entire range of two, three and five-year fixed rate mortgages and launching three products priced at 3.89%.

The 3.89% rate is available on the 60% LTV 5-Year Fixed Standard across three buyer categories: first-time buyers, home movers and existing customers looking to switch.

Rate cuts have been applied to over 100 products, with most mortgages now priced under 5%.

In the two-year fixed category, the range starts at 4.29% on the 60% LTV 5-Year Fixed Standard, which is also available as a three-year fix, starting at 4.19%.

The biggest rate reduction is on the 3-Year Fixed Standard available to first-time buyers, home movers and existing customers, now at 4.19%, down from 4.49%.

Meanwhile, NatWest has launched a sub-4% fix for customers who bypass mortgage brokers and go direct to the bank instead. The 3.97% deal is available online only, to borrowers with at least a 40% deposit (60% LTV) willing to lock in for five years, and comes with a fee of £1,495 – though NatWest does pay the valuation fee for you.

Getting out of the deal early will cost borrowers an early repayment charge of 4.5% in the first year, 4.25% in year two, 4% in year three, 2.5% in year four and 1% in the final year. Once the deal expires, those who don’t remortgage will fall onto NatWest’s standard variable rate of 8.24%.

1 August: Yorkshire BS, Accord, and MPowered Mortgages Announce Cuts To Residential Fixed Rates

Yorkshire building society has cut fixed rate residential mortgage deals across its range by up to 0.25 percentage points, coinciding with the first cut to Bank Rate in more than four years, writes Jo Thornhill.

Yorkshire is offering a competitive two-year fixed rate for home purchase at 4.74% with a £495 fee and £250 cashback, for buyers with at least a 25% cash deposit.

The mutual lender has an equivalent two-year deal for remortgage borrowers with 25% equity in their property at 4.79%, also with a £495 fee and £250 cashback.

The rate reductions come as the Bank of England reduced the Bank Rate today from 5.25% to 5% in welcome news for borrowers. Bank Rate had been at a 16-year high of 5.25% since August last year.

While commentators are not expecting today’s cut to signal a campaign of further rate reductions, it should pave the way for cheaper fixed and tracker rate mortgages.

Accord, the specialist lending arm of Yorkshire building society, has also nudged down its selected residential fixed rates by up to 0.25 percentage points, effective from 2 August. It is offering a fee-free five-year fixed rate deal for home purchase at 5.07% (down from 5.27%) for borrowers with a 10% cash deposit (90% LTV).

MPowered Mortgages has cut selected residential two-, three- and five-year fixed rates for borrowers with between 40% and 20% equity or cash deposit (60% LTV to 80% LTV). Among its new deals is a five-year fixed rate for purchase at 4.14% with a £999 fee (at 60% LTV).

David Hollingworth, associate director at broker L&C Mortgages, said: “Fixed rates have been edging down recently with small but frequent cuts helping to nudge five-year deals close to and even under 4%.

“Today’s Bank of England interest rate decision to cut a little sooner than many had previously anticipated should only help to add further weight to those reductions.

“We can therefore expect to see further pricing improvements in fixed rates, as lenders continue to fight hard to gain a share in a very competitive market.”

31 July: Bank Rate Decision Due Tomorrow, 1 August

Halifax has cut selected remortgage fixed rates by up to 0.33 percentage points, effective from tomorrow (1 August).

The bank’s two and five-year fee-free fixed rates have seen the biggest reductions. It is offering a fee-free five-year deal at 4.55% for borrowers with at least 25% equity in their home (75% LTV). It is offering a fee-free two-year rate at 5% for borrowers with 40% equity (60% LTV).

The fee-free five-year fixed rate for borrowers with 20% equity in their property (80% LTV) has been cut by the full 0.33 percentage points from 5.26% to 4.93%.

NatWest is cutting selected fixed rates for new customers by up to 0.15 percentage points, effective from 1 August, writes Jo Thornhill.

It comes as lenders look ahead to the Bank of England’s decision on interest rates which is due at midday tomorrow (1 August).

While some experts believe the Bank will cut the benchmark Bank Rate (which has been at 5.25% since August 2023), by a quarter percentage point to 5% tomorrow, other pundits predict the first rate cut won’t come until September.

NatWest has lowered the cost of its two and five-year fixed rates for residential purchase and remortgage. It is offering two-year fixed rates for purchase from 4.48% with a £1,495 fee (at 60% loan to value). The five-year equivalent purchase rate is now 4.03%.

For remortgage borrowers, NatWest is offering two-year fixed rates from 4.54% with a £1,495 fee, or from 4.24% over five-years. Both deals require borrowers to have at least 40% equity in the property (60% LTV).

The bank has deals at slightly higher rates with a lower fee. For example, the five-year fixed rate for remortgage is at 4.29% with a £995 fee (60% LTV).
Accord, the specialist lending arm of Yorkshire building society, has reduced selected residential fixed rates for its existing customers, including product transfer deals and rates for additional borrowing. Its new rates and deals, available through brokers, will be live on its website from tomorrow (1 August).

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30 July: Bank Of England Sees Rise In Market Confidence

Santander has slashed its fixed-rate mortgage deals for residential borrowers by up to 0.2 percentage points, while buy-to-let rates have been lowered by up to 0.13 percentage points, writes Jo Thornhill.

It follows other major lenders, including Barclays, Nationwide building society and TSB, in reducing fixed rates in recent weeks (see stories below) as the market expects the Bank of England will cut interest rates in August or September.

Santander’s new residential rates, available direct and through brokers, include a five-year fixed rate for home purchase at 4.13% (60% loan to value) with a £999 fee. The equivalent deal for remortgage customers is now at 4.32%.

The bank’s two-year fixed rates now start from 4.51% for purchase and 4.67% for remortgage. Both deals require either a 40% cash deposit or equity and have a £999 product fee.

Among its buy-to-let rates, Santander is now offering a five-year fixed rate for purchase at 4.38% (60% LTV) with a £1,749 fee, or at 4.37% for remortgage. The equivalent two-year fixed rate deals start from 4.62% (purchase) and 4.70% (remortgage) respectively.

Virgin Money, which is in the process of being acquired by Nationwide in a £2.9bn deal, has cut selected fixed rates for new residential and buy-to-let borrowers by up to 0.31 percentage points effective from 31 July. It has also launched a range of broker exclusive deals including a five-year fixed rate for remortgage at 4.25% with a £995 fee (60% LTV). The equivalent two-year rate is at 4.59%.

The bank is offering a five-year fixed rate BTL remortgage deal at 4.37% with a £2,195 fee (60% LTV). Selected fixed rate product transfer deals for existing residential and BTL customers have also been reduced by up to 0.1 percentage point, with residential five-year deals starting at 4.27% and BTL deals starting at 4.49% (both at 60% LTV).

Clydesdale Bank, part of Virgin Money group, has also cut selected two and five-year residential fixed rates by 0.12 percentage points. Its lowest five-year fixed rate deals now start from 4.34% for home purchase and 4.44% for remortgage (60% LTV), both with a £999 fee.

The lender’s professional mortgage range (deals for newly qualified professionals in a range of occupations, such as doctors, dentists, vets and pharmacists) has been slashed by up to 0.32 percentage points and fee-free five-year rates for purchase now start from 4.57% (75% loan to value).

Paragon Bank, the specialist lender, has cut two-year fixed rate buy-to-let deals. Rates for standard, self-contained investment properties with an A to C energy performance certificate (EPC), now start from 3.89%. Rates for properties with an EPC of D or E start from 3.94%. Both deals are available at 70% loan to value and have a 5% fee.

The Bank of England’s monetary policy committee will meet on Thursday this week (1 August) to vote on whether or not to reduce the Bank Rate. Its benchmark interest rate is at 5.25%.

The Bank published figures this week showing net mortgage borrowing rose to £2.7bn in June, up from £1.3 billion in May, suggesting a rebound in confidence in the housing market.

Mortgage approvals for home purchase were stable at 60,000 in June, the figure was the same in May and 60,800 in April, this year.

Remortgage activity fell marginally from 29.300 in May to 27,500 in June. This is a measure of borrowers remortgaging to a different lender, not product transfer deals where borrowers switch to a new deal with their existing lender.

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25 July: Higher Rates ‘Push 320,000 Into Poverty’

Barclays and TSB are the latest lenders to cut fixed-rate mortgage deals as the summer price war intensifies ahead of the Bank Rate announcement on Thursday 1 August, writes Jo Thornhill.

The news comes as research reveals 320,000 borrowers have been pushed into poverty due to higher mortgage rates over the past two years.

Barclays has announced cuts of up to 0.1 percentage points to a broad range of its residential purchase and remortgage deals, effective from 26 July. Selected product transfer deals (for existing customers looking for a new rate) have also been cut by up to 0.1 percentage points.

It is offering a five-year fixed rate for home purchase at 4.04% with an £899 fee, for borrowers with at least a 40% cash deposit (60% loan to value). Barclays Premier Banking customers can get the same deal at 4.03%.

For remortgage, two-year fixed rates now start from 4.6% with a £999 fee (60% LTV), or from 4.26% over five-years, with the same fee (also 60% LTV).

Product transfer deals start from 4.57% (two-year fix) or 4.21% (five-year fix) at 60% LTV with a £999 fee.

TSB has also lowered selected fixed rates for new and existing customers by up to 0.2 percentage points, effective from 26 July.

The lender is offering a two-year fixed rate for home purchase from 4.54% with a £995 fee, or at 4.14% over five-years. Its remortgage rates now start from 4.74% over two years or 4.34% over five-years, both with a £995 fee. These deals all require at least 40% cash deposit or equity in the property (60% LTV).

Barclays and TSB follow a number of other lenders in reducing borrowing rates this week, including Nationwide building society, which cut its best five-year fixed rate for home purchase to just 3.99% (see stories below).

Nick Mendes, mortgage broker at John Charcol, said: “The rate reductions we’ve seen this week are great news for borrowers and reflect strong market competition and confidence that there will soon be a reduction to the Bank of England Bank Rate.

“These latest reductions will provide significant savings for those looking to secure a mortgage or remortgage, making it an opportune time to consider locking in a fixed rate.”

Higher rates increase financial distress

A report published today by the Institute for Fiscal Studies (IFS) says 320,000 households have been pushed into poverty due to significantly higher mortgage rates.

The data shows borrowers who have remortgaged or taken out new mortgages since 2022 have experienced sharp falls in their disposable income as higher interest rates have pushed up housing costs.

The Bank of England Bank Rate (the benchmark interest rate) rose from 0.1% in December 2021 to a high of 5.25% in August 2023.

Sam Ray-Chaudhuri, an author of the report, said: “Rising mortgage rates have played and are likely to continue to play an important role in many households’ living standards.

“But, perhaps surprisingly, they are not measured properly in the official income data. This has led to the headline statistics understating the number of people in poverty, something set to get worse in next year’s data.”

The next Bank of England Monetary Policy Committee (MPC) decision on interest rates is on 1 August. Bank Rate is currently at 5.25%.

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24 July: Latest Reductions Follow In Wake Of Nationwide’s Sub-4% Fix

Skipton building society is cutting selected two-year fixed and tracker rate mortgage deals by up to 0.2 percentage points, effective from tomorrow (25 July), writes Jo Thornhill.

The lender is one of a growing number to have trimmed the cost of fixed rate borrowing over the past fortnight. Yesterday, Nationwide building society reduced its five-year fixed rate for purchase to 3.99% (see story below). It’s the first time fixed rates have dropped below 4% since April.

Skipton will offer a two-year residential fixed rate for purchase and remortgage priced at 4.75% with a £495 fee. The deal is reserved for borrowers with at least 40% equity or cash deposit (60% loan to value).

It is also offering a two-year fixed rate for borrowers with 25% deposit or equity (75% LTV) priced at a slightly higher 4.85% with a £495 fee, or at 4.8% with a £995 fee.

The mutual lender also has a two-year tracker rate, for purchase or remortgage, at 0.4 percentage points above Bank of England Bank Rate (currently at 5.25%) giving a starting pay rate of 5.65%. The deal comes with a £995 fee and is available at 75% LTV. This represents a 0.2 percentage point rate cut from the previous equivalent tracker deal.

Mpowered Mortgages has cut selected two, three and five-year residential fixed rates by up to 0.45 percentage points, also effective from 25 July.

The biggest cuts are for deals at 80% loan to value. The lender is offering a three-year fixed rate for purchase at 4.75% with a £999 fee (80% LTV). The equivalent three-year fixed rate for remortgage is now at 4.98%, also with a £999 fee.

Atom Bank, the specialist lender, has reduced residential fixed rates on its prime mortgage range (for borrowers with good credit scores) by up to 0.15 percentage points, and rate on its near prime range by up to 0.2 percentage points.

Its prime two-year fixed rates now start from 5.39%, three-year rates start from 5.19% and five-year deals start from 4.94%. Deals at these rates all charge a £900 product fee and are available up to 85% LTV.

Bank of Ireland has lowered selected product transfer deals for existing borrowers. It is offering a two-year fixed rate at 4.82% with a £1,495 fee, down from a previous 4.99%, and a five-year product switch deal priced at 4.74% (down from 4.84%) with a £999 fee. Both deals require customers to have at least 40% equity in their property (60% LTV).

Reductions at Atom Bank and Bank of Ireland are effective immediately.

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23 July: Nationwide Offers Market-Leading 5-Year Fix

Nationwide building society is cutting fixed rates across its mortgage range by up to 0.25 percentage points to offer a five-year deal at under 4%, writes Jo Thornhill.

The building society follows in the footsteps of HSBC, NatWest and Halifax, all of which have reduced the cost of fixed rates for borrowers in recent days for home purchases.

But while their five-year fixed-rate deals are marginally above 4%, Nationwide’s 3.99% deal will be the current market leader. It is four months since lenders were last offering five-year fixed rates at 4%.

Nationwide’s rate cut will be effective from tomorrow (24 July). The lender will offer a five-year fix for purchase at table-topping 3.99% – a 0.19 percentage point cut on the previous deal at 4.18%.

The deal comes with a £1,499 fee and requires a 40% deposit. It also only applies to loans of £300,000 or more.

Nationwide will also offer a five-year fixed rate for home purchase at 4.04% with a £999 fee – also for borrowers with a 40% deposit.

For remortgage borrowers, Nationwide is offering five-year fixed rates from 4.27% with a £1,499 fee at a 60% loan to value (LTV).

It is also reducing selected two, three and five-year fixed rates for existing customers by 0.25 percentage points, including deals for those with just 5% equity in their property (95% LTV). Five-year fixed rates for product transfer will start from 4.24%.

Nick Mendes, broker at John Charcol, said: “Nationwide is the first lender to breach the 4% rate benchmark following recent weeks of downward repricing. This is fantastic news for borrowers and signifies a significant change in the mortgage landscape after recent months of increased rates.

However he added: “This rate is for purchases only. Those remortgaging will need to wait a bit longer before we see rates below 4% as well. I expect the biggest future reductions will be in remortgage rates, as they still have room to fall.”

Aldermore has reduced fixed rates across its buy-to-let range, effective from 24 July. Company landlords with multiple properties can get a two-year fixed rate at 4.99% (75% LTV) with a 3% fee. Rates for landlords on single residential investment properties are at 5.09% (75% LTV) with a 3% fee.

Gen H has cut selected fixed rates by up to 0.3 percentage points. New rates and deals, available through brokers, will be live from tomorrow morning (24 July).

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22 July: Fixed Rates Fall But First-Timers Still Struggling – Skipton

HSBC has cut fixed rates across a broad range of its residential and buy-to-let mortgage deals, for new and existing customers, effective from tomorrow (23 July), writes Jo Thornhill.

The high street bank, which offers deals direct and through brokers, has been offering highly competitive rates in recent months, so this latest cut is expected to take it close to the top of the best buy tables.

HSBC’s new rates and deals will be live online from tomorrow morning (23 July). Currently, the lender is offering a five-year fixed rate for residential remortgage at 4.36% with a £1,499 fee for borrowers with at least 40% deposit.

Virgin Money has cut selected high loan to value fixed rates by up to 0.15 percentage points, effective from today (22 July) at 8pm. Two and five-year fixed rates for purchase and remortgage, for borrowers with at least a 20% cash deposit or equity (80% LTV), will see reductions.

Among the new rates offered by Virgin will be a five-year fixed rate for remortgage at 80% LTV at 4.8% with an £895 fee.

Virgin has also nudged down rates on selected buy-to-let and residential product transfer deals, for existing customers by up to 0.1 percentage points for both types of deal. Five-year product switcher deals for existing customers will start from 4.3%.

The latest cuts follow a slew of lenders that have taken the knife to the cost of fixed mortgage rates in recent weeks. The market is expecting the Bank of England to cut interest rates (Bank Rate is currently at 5.25%) on either 1 August, when it next makes a decision on interest rates, or in September.

Skipton building society has launched a home affordability index and interactive tool to help with greater information for potential first-time home buyers.

The index, which in partnership with Oxford Economics, analyses the affordability of buying a home in different regions of the country, found that only one-in-eight first-time buyers can afford to purchase the average property in their local area. The figure plummets to just one-in-100 for those on salaries of £22,850 a year or less.

The least affordable areas of the country are London, the West Midlands and Wales.

Skipton used its own data, plus information from the Office for National Statistics (ONS), Bank of England and Oxford Economics, to calculate the affordability of home ownership based on a range of factors including earnings, property prices and housing costs.

It reveals that almost 80% of first-time buyers don’t have enough savings for a deposit to buy the average home, and 40% of those in rented housing spend at least 45% or more of their income on rent, which is a major barrier to saving towards a deposit.

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18 July: Halifax, NatWest Latest Major Lenders To Cut Rates

Halifax, the UK’s biggest mortgage lender, has cut selected two and five-year fixed rates for purchase and remortgage by up to 0.22 percentage points, effective from 19 July.

Among the new rates the bank will offer is a market-leading five-year fixed rate for purchase at 4.05% with a £999 fee, for borrowers with at least a 40% deposit.

For remortgage borrowers, Halifax has a five-year fixed rate at 4.43% with a £999 fee (75% loan to value) and a three-year fix at 4.52% with the same fee (60% LTV). Its two-year remortgage fixed rate falls to 4.67% (60% LTV) with a £999 fee.

NatWest Bank has cut residential fixed rates by up to 0.23 percentage points, and buy-to-let rates by as much as 0.16 percentage points, effective from tomorrow (19 July), writes Jo Thornhill.

A swathe of lenders have trimmed fixed rates in recent weeks in anticipation of a cut to the Bank Rate (currently at 5.25%) by the Bank of England, either in August or September (see stories below). Hopes of a rate cut were raised earlier this week following figures that showed annual inflation remained at its target 2% in June.

NatWest has reduced selected two and five-year fixed rates for residential purchase by up to 0.23 percentage points. The lender is offering a two-year fix for purchase at 4.58% (previously 4.72%) with a £1,495 fee, for borrowers with at least a 40% deposit. The equivalent five-year fixed rate has fallen to 4.14% (previously 4.29%).

The bank’s residential remortgage rates have been cut by up to 0.18 percentage points. Five-year fixed rates now start from 4.3% with a £1,495 fee (60% loan to value), down from 4.36%.

NatWest has also cut selected five-year buy-to-let fixed rates for remortgage. It is offering a five-year deal at 4.5% with a £3,499 fee, down from 4.66%.

TSB has cut selected fixed rate deals for purchase and remortgage by up to 0.15 percentage points, effective from 19 July. It is the bank’s second rate reduction in less than a week after it trimmed deals by up to 0.2 percentage points on Monday (15 July).

The lender’s rates for existing borrowers looking for a new deal (product transfer and additional borrowing), have been cut by up to 0.1 percentage points. All new rates and deals will be on TSB’s website tomorrow.

Clydesdale Bank, part of Virgin Money banking group, has cut selected two and five-year residential fixed rates by up to 0.28 percentage points, effective from 19 July. Its new rates and deals will be live on its website from tomorrow.

Leeds building society has cut two, three and five-year fixed rates for existing borrowers (product transfer deals) by up to 0.13 percentage points, and two-year fixed rates for new customers by up to 0.11 percentage points, also effective from 19 July.

Accord, part of Yorkshire building society, has cut selected residential fixed rates for the third time in two weeks. Its latest rate reduction, of up to 0.2 percentage points across deals up to 90% loan to value, will see the lender offering a five-year deal for home purchase at 4.67% with a £995 fee for borrowers with at least a 25% deposit.

The mutual lender is also offering a two-year fixed rate for remortgage at 5.77% (90% LTV) with a £995 fee.

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16 July: Lenders Look Ahead To August Bank Rate Decision

Co-operative Bank and Virgin Money are the latest in a string of lenders to slash mortgage rates as the clamour for business intensifies, writes Jo Thornhill

Co-op Bank for Intermediaries has cut selected two and five-year fixed rates across its residential ranges for new business and product transfer deals (for existing customers) by up to 0.32 percentage points. However, a cut of just 0.05 percentage points has been applied to the lender’s buy-to-let deals.

The bank is offering two-year fixed rates for residential purchase or remortgage from 4.85% with a £999 fee (60% loan to value), and five-year fixed equivalent deals from 4.38%.

Buy-to-let deals at the lender now start from 4.84% for a two-year fix, or 4.49% for five-year fix. Both deals come with a £1,999 fee and are available for purchase or remortgage at 60% LTV.

Virgin Money has also cut selected residential and buy-to-let rates, available through brokers, by up to 0.12 percentage points. Product transfer deals for existing borrowers are cut by up to 0.18 percentage points.

The lender, which is in the process of being taken over by Nationwide building society, is now offering a fee-free five-year fixed rate for residential remortgage at 4.65% for borrowers with at least 25% equity.

It also has a fee-free five-year fix for home purchase, for borrowers with just a 5% cash deposit (95% LTV) at 5.34%.

Accord Mortgages, the specialist lending arm of Yorkshire building society, has cut fixed rates across its buy-to-let range for the second time this month. Cuts of up to 0.25 percentage points will be applied to deals with LTVs of up to 75%.

The mutual lender now offers a three-year remortgage fixed rate at 4.39% (60% LTV), and a five-year deal priced at 4.64% (75% LTV). Both deals charge a £3,495 fee.

The Mortgage Works, the specialist lending arm of Nationwide building society, has cut selected buy-to-let ‘switcher’ fixed rates, for existing customers looking for a new deal, by up to 0.2 percentage points, effective from 17 July. Its lowest rates now start from 3.89%, although this rate applies to deals with a 3% fee. To qualify borrower must also have at least 35% equity in their BTL property (65% LTV).

MPowered Mortgages has cut selected two-and three-year fixed rates, for residential purchase and remortgage, by up to 0.3 percentage points. It is offering two-year fixed rates for residential purchase from 4.58% with a £999 (at 60% LTV). Equivalent deals with no fee now start from 4.79%. Its three-year fixed rate for residential remortgage starts from 4.45% with a £999 fee (60% LTV).

The next Bank of England interest rate decision is on 1 August. The Bank Rate is currently at 5.25% and has been at this level since August 2023.

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15 July: Market Prepares For Bank Of England Announcement

Santander, TSB and Yorkshire building society are the latest lenders to cut selected mortgage rates as costs continue to edge downwards in expectation of a rate cut by the Bank of England, writes Jo Thornhill.

Santander has cut fixed rates for purchase and remortgage by up to 0.14 percentage points, effective from 16 July.

As part of its rate review it is cutting all fixed rates and two-year tracker rates in its large loan range (for mortgages of £250,000 to £5 million). Tracker deals in this range will be cut by 0.15 percentage points.

TSB is cutting a small number of its residential fixed rate deals by up to 0.2 percentage points.

Selected BTL deals are being cut by 0.15 percentage points, effective from 16 July. Among the bank’s new deals is a three-year fix for purchase or remortgage at 4.75% with a £495 fee (60% loan to value).

Yorkshire building society has cut selected fixed rates by 0.25 percentage points with immediate effect. It is the mutual lender’s second rate cut in two weeks.

It is offering a two-year fixed rate for residential purchase at 4.69% with a £1,495 fee (75% loan to value) and a fee-free three-year fix at 5.04% for purchase or remortgage at 80% LTV.

Over five-years it has a fixed rate at 4.49% for remortgage borrowers with at least 25% equity in their home (75% LTV) with a £1,495 fee.

The next Bank of England interest rate decision is on 1 August. The Bank Rate is currently at 5.25% and has been at this level since August 2023.

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11 July: Competition Intensifies Ahead Of Bank Rate Cut

Barclays is cutting selected fixed rates for residential purchase and remortgage by up to 0.33 percentage points, laying the gauntlet down to other lenders with its table-topping rates, writes Jo Thornhill.

The latest reductions will push Barclays five-year purchase fixed-rate to the top of the best buy tables with a rate of 4.09% (60% loan to value) with an £899 fee. Barclays Premier banking customers can secure the same deal at a rate of 4.08%.

Barclays has also slashed remortgage rates and is offering two-year fixed rates from 4.70% (4.67% for Premier banking customers) with a £999 fee (60% LTV) and equivalent five-year rates from 4.36% (4.31% for Premier customers).

Coventry for Intermediaries has cut selected residential fixed rates by up to 0.18 percentage points and deals across its buy-to-let range by up to 0.15 percentage points.

The new rates, available through brokers, include a five-year fixed rate for residential remortgage at 4.34% with a £999 fee (65% LTV) or at 4.45% (75% LTV).

Its buy-to-let deals start from 4.72% for a five-year fixed rate. This deal has a £1,999 fee and is available at 65% LTV. There is an equivalent five-year deal at 4.77% with no fee.

Accord, the specialist lending arm of Yorkshire building society, has cut selected residential fixed rates by up to 0.25 percentage points. The largest reductions are on deals for borrowers with a 10% deposit (90% loan to value). The lender is offering a five-year fixed rate for home purchase at 90% LTV at 5.14% with a £995 fee.

First Direct has cut selected two, three and five-year fixed rate deals for purchase by up to 0.17 percentage points. The direct-only lender is offering a five-year fixed rate for home purchase at 4.31% with a £490 fee. This is for borrowers with at least a 40% cash deposit towards their property purchase (60% LTV).

Two-year equivalent fixed rates for purchase at 60% LTV now start from 4.73%, while three-year rates start from 4.64%.

The biggest rate reduction has been made on the lender’s two-year fixed rate for purchase at 85% LTV, which has been reduced by the full 0.17 percentage points from 5.16% to 4.99%. This deal has a £490 fee.

MPowered Mortgages has cut its two-year fixed rate mortgage deals for residential purchase by up to 0.15 percentage points. It is offering rates from 4.63% with a £999 fee (60% LTV), or from 4.89% with no fee.

Virgin Money (including Clydesdale Bank) has cut its standard variable rate (the interest rate borrowers revert to after a fixed or tracker deal comes to an end unless they switch to a new deal) from 9.49% to 9.24%. It is one of the highest SVRs on the market. The market average SVR is 7.87%, according to Better.co.uk.

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8 July: Lenders Confident Of Bank Rate Cut In Coming Months

The Nationwide and Skipton building societies, along with Virgin Money, have each slashed the cost of their respective fixed-rate mortgage deals, effective from 9 July, writes Jo Thornhill.

It follows similar moves by a swathe of lenders over the past two weeks.

Nationwide has made cuts of up to 0.3 percentage points across its residential range for purchase and remortgage. It is offering a market-leading five-year fixed purchase rate of 4.18% for borrowers with a 40% cash deposit. The product fee is £1.499.

It also has a five-year fixed rate for remortgage at 4.94% (at 80% loan to value) with the same fee.

The lender, which is in the process of buying Virgin Money, has also reduced rates by up to 0.2 percentage points on its product transfer rates for existing customers looking for a new deal.

Skipton has cut residential purchase and remortgage rates by up to 0.33 percentage points. It has a fee-free two-year fixed rate for purchase at 4.99% for borrowers with a 40% deposit (60% LTV), and a five-year fixed rate for remortgage at 4.59% (at 75% LTV) with a £1,295 fee.

Virgin Money has reduced selected residential and buy-to-let mortgage rates by up to 0.22 percentage points.

Among its rates, offered exclusively through brokers, is a five-year fixed rate for remortgage at 4.54% with an £895 fee (65% LTV). It also has a five-year purchase and remortgage buy-to-let deal at 4.52% (60% LTV) with a £2,195 fee.

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5 July: More Cuts Expected Ahead of Bank Rate Decision

HSBC has unveiled its new residential fixed rate mortgage deals, including market-leading deals for homebuyers, and lower rates across its range for first-time buyers and remortgage borrowers, writes Jo Thornhill.

It comes as some experts say the election of a new Labour government today could now lead to a mortgage and property market bounce.

HSBC, which has cut deals across its fixed rate range by up to 0.14 percentage points, is offering a five-year fixed rate deal for purchase at 4.22% with a £999 fee, for borrowers with at least a 40% cash deposit. This deal is market-leading.

Other highlights include a three-year fixed rate for home purchase at 4.89% for borrowers with a 15% cash deposit (85% loan to value) with a £999 fee and £350 cashback on completion, and a five-year fixed rate for remortgage at 4.39% with a £999 fee (at 60% LTV).

Most major lenders have cut their fixed mortgage rates over the past week, in part due to increasing competition for new business and also in expectation of an interest rate cut by the Bank of England as early as 1 August (see stories below).

Reacting to the change in government, Tim Bannister, property expert at Rightmove, said: “The certainty of having the next government in place will be good for the market, and we can see in our data that in previous election years, there has been a bounce in homemover activity after an election – so the same could happen this year in the short term, particularly against a background of a potential Bank of England rate cut on the horizon, and lower mortgage rates.

“It’s encouraging to see that Labour’s manifesto focused on building more homes (it has pledged to build 1.5 million homes over five years) and planning reform. Creating more homes for sale and for rent quickly, while maintaining quality, is a pressing issue, to ensure there are more homes to meet the demand.”

Nick Mendes at broker John Charcol said: “With a newly-elected Labour government, potential changes to mortgage rates are a topic of interest. Markets appreciate stability, and this election has been a one-horse race from the start, meaning we haven’t seen the usual volatility when forecasting the impact of impending fiscal policies on the economy.

“Labour has played it safe, and today’s decision is unlikely to deter the current downward pricing trend in the mortgage market, which we have seen in recent days.”

Nick Leeming, chairman of estate agent Jackson Stops, said: “Optimism for some is supported by our research which found that nearly a third of respondents believe a Labour government will make home ownership more accessible. For house buyers and sellers in the short term the market is likely to remain on the same trajectory as the first half of 2024. The knowledge that a change of government was coming has avoided a cliff edge.

“The property market can also take comfort in its resilience, having navigated changing governments and policy changes time and time again.”

Amanda Symes-Reeves, product manager at lender MPowered Mortgages said: “We are encouraged by Labour’s plans for building a new generation of new towns, fast tracking the approval of brownfield sites, and releasing some ‘low quality’ green belts for new developments.

“If they can crack this, then this will have a positive impact by helping more people on the ladder. Labour has a proven track record of success with housing building so let’s hope they can live up to this and deliver on their promises.”

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4 July: Competition Intensifies For Borrower Business

HSBC, Barclays and Yorkshire building society have announced reductions to the cost of fixed-rate borrowing in the footsteps of other major lenders including Halifax, NatWest and Santander as expectations grow that interest rates will be cut by the Bank of England next month.

The next meeting to determine the Bank Rate, which is currently 5.25%, will be on 1 August.

HSBC has cut two, three and five-year residential fixed rates across a broad range of its deals, available through brokers, effective from 5 July. New rates, which will be unveiled tomorrow, will apply on deals for first-time buyers, home movers and remortgage customers, as well as selected deals for product transfer (for existing customers looking for a new deal).

Barclays has cut selected product transfer deals for existing residential and buy-to-let customers looking for a new fixed rate deal, effective from 5 July. Its fee-free five-year product transfer fixed rate for residential borrowers is cut to 4.68% (from 4.95%). This is for borrowers with at least 25% equity in their home (75% LTV).

Yorkshire building society has cut fixed rates for residential purchase and remortgage by up to 0.2 percentage points. The mutual lender is now offering a five-year fixed rate for remortgage at 4.69% (down from 4.89%) with a £495 fee, for borrowers with 25% equity in their home (75% LTV). Over two-years it now has a deal for purchase at 4.89% (down from 4.99%) with a £1,495 fee for customers with a 25% cash deposit (75% LTV).

Mark Harris, chief executive of broker SPF Private Clients, said: ‘With the big five lenders – Barclays, HSBC, Santander, Halifax and NatWest – reducing their mortgage rates this week, lenders continue to jostle for business as they ramp up the summer sales. Those lenders who haven’t yet repriced are likely to follow suit, as long as service levels allow.

“Even though bank swap rates, which underpin the pricing of fixed-rate mortgages, are not showing a consistent downwards trend, the need to generate more business seems to be motivating lenders to tweak their rates.”

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3 July: Santander Joins Rate-Cutting Spree

Santander has cut selected fixed rates for first-time buyers and home purchase by up to 0.16 percentage points, writes Jo Thornhill.

The new rates and deals will be unveiled and available from tomorrow (4 July). But Santander has been consistently among the best buys in recent months, and brokers are hopeful its reduced rates will be a boost for home buyers.

The Spanish-owned bank currently offers a five-year fixed rate for purchase at 4.28% for borrowers with a 40% cash deposit. There is a £999 fee. The equivalent two-year rate is 4.8%.

For borrowers with a 10% cash deposit the current rate is 5.10% for a five-year fix or 5.62% over two years. Both deals have a £999 fee.

Nick Mendes at broker John Charcol said: “Santander is the latest lender to make its mark during a week of significant repricing by high street lenders (see stories below).

“The recent flurry of activity has motivated prospective buyers to reassess their options. With the election nearing its conclusion, any hopes of last-minute incentives for first-time buyers are fading. Now is the time to act swiftly to stay ahead of the competition.”

Aldermore has cut selected fixed rate buy-to-let deals, available through brokers, by up to 0.2 percentage points. It has also launched a range of five-year fixed rate deals for borrowers at 65% loan to value. This includes a fee-free, five-year, standard individual landlord BTL fixed rate at 5.99% for remortgage. The rate drops to 5.69% for the same deal with a 1.5% product fee
Residential by Foundation, the residential mortgage arm of specialist lender Foundation Home Loans, has reduced fixed rates across its range, available through brokers, by up to 0.3 percentage points. The cuts have been applied to its green mortgage deals (lending on properties with an energy performance certificate rated A to C), deals for key workers and rates on its F1 range, for borrowers with near-prime credit scores, among others. The lender is offering a two-year fixed rate for remortgage at 6.54% (80% LTV) for near-prime borrowers. There is a £595 fee.

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1 July: NatWest’s Second Round Of Reductions In Less Than Fortnight

NatWest has cut selected fixed rate mortgage deals, available direct and through brokers, by up to 0.23 percentage points, effective from tomorrow (2 July), writes Jo Thornhill.

It follows cuts of up to 0.17 percentage points to fixed rate deals by the bank less than two weeks ago.

Halifax has also announced it will cut selected fixed rate deals for first-time buyers and home movers by up to 0.19 percentage points, effective from 3 July.

Among NatWest’s newly-priced deals is a five-year fixed rate for purchase at 4.34%, or 4.77% over two years. For remortgage, five-year rates are available at 4.41%, or 4.81% over two years. These deals are all available at 60% loan to value and come with a £995 product fee.

NatWest has also cut rates on its product transfer deals (those for existing borrowers looking for a new rate). For these customers the bank is offering a five-year fixed rate at 4.46% or a two-year rate at 4.86%. Both deals are at 60% LTV and charge a £995 fee.

Selected buy-to-let (BTL) deals at NatWest have been cut by up to 0.18 percentage points. Deals for BTL remortgage start from 4.81% fixed over two years, or 4.66% fixed over five years. These deals are available at a 60% loan to value and come with a £3,499 fee. BTL deals with a lower product fee are available at higher rates.

Virgin Money has cut selected residential fixed rates, available through brokers, including reductions of up to 0.1 percentage points for new business purchase deals and up to 0.15 percentage points on selected product transfer deals (for existing customers looking for a new rate).

The bank is offering a five-year fixed rate for purchase at 4.5% for borrowers with a 25% cash deposit. There is an £895 fee.

Clydesdale Bank, the brand owned by Virgin Money, will also cut selected fixed rate residential mortgage deals by up to 0.38 percentage points. Buy-to-let deals have been slashed by up to 0.73 percentage points. The changes are effective from 2 July.

Residential remortgage fixed rates will be reduced by up to 0.15 percentage points to start from 4.52% while purchase deals will be reduced by up to 0.18 percentage points, starting from 4.61%. Both rates apply to five-year fixes at a 65% LTV.

Selected professional and newly qualified professional mortgages, for borrowers working in certain professions, including architects, barristers, dentists, doctors and vets, will be reduced by up to 0.38 percentage points.

The Mortgage Works, the specialist lending arm of Nationwide building society, is cutting selected fixed rates for buy-to-let borrowers by up to 0.3 percentage points, effective from 3 July. The rate reductions will benefit new and existing customers. Among its new rates is a five-year fixed rate for standard BTL purchase or remortgage at 4.04% with a 3% fee (65% loan to value).

Accord Mortgages, the specialist lending arm of Yorkshire building society, has cut a range of fixed rate buy-to-let mortgage deals by up to 0.4 percentage points, plus rates on its residential deals (at higher loan to values of between 75% and 85% LTV) by up to 0.1 percentage point. The lender is offering a five-year residential fixed rate for purchase at 4.95% (down from 5.05%) with a £1,995 fee for borrowers with a 25% cash deposit (75% LTV).

Skipton building society is launching a number of additional two and five-year fixed rate deals for new customers with 40% cash deposit or equity (60% LTV), or at least 25% deposit or equity (75% LTV).

It includes a five-year fixed rate for home purchase at 4.41% with a £1,495 fee (60% LTV). It will also introduce new base rate tracker deals for purchase or remortgage at 0.52 percentage points above the Bank of England Bank Rate (currently 5.25%). This deal, which has a starting rate of 5.77%, is available at 60% loan to value and comes with a £995 fee.

But mortgages themselves are getting harder to come by, according to the latest Bank of England data. It showed that mortgage approvals (for home purchase) fell by 1.3%, from 60,800 in April to 60,000 in May. Approvals for remortgage (switching to a deal with a new lender) also dipped slightly from 29,900 to 29,600 over the same period.

Overall individual net borrowing of mortgage debt fell to £1.2 billion in May, down from £2.2 billion in April.

Alice Haine, personal finance analyst at online investment platform Bestinvest (part of Evelyn Partners), said: “Mortgage approvals – an indicator of future borrowing – dipped in May as lingering affordability concerns caused borrowers to approach the market with caution.

“Interest rates have remained on pause at a 16-year high of 5.25% since August last year, something also impacting net mortgage lending, which fell in May amid wavering consumer confidence.

She added: “Inflation may be easing, but persistently high borrowing costs are still making it hard for buyers to secure the homes they want. All eyes are on the next rate decision at the start of August when buyers and those looking to refinance are hoping for some respite.

“People may be seeing their wages increase in real terms, but robust pay growth is still no match for the hit from higher mortgage rates, something keeping house prices relatively stable for now.”

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28 June: 400k Households To See 50% Increases

More than three million borrowers could face shock increases in their mortgage payments over the next two years, writes Jo Thornhill.

According to the latest Bank of England data, these households are currently paying mortgage rates at under 3% but are due to remortgage onto what will inevitably be more expensive deals between now and the end of 2026.

Around 400,000 households will see a significant increase in their monthly mortgage payments of 50% or more.

For the average mortgage holder rolling off a low fixed rate between now and the end of 2026, the Bank of England says the average jump in monthly repayments will be around £180 – a 28% rise on a typical £650 repayment.

Despite this, the Bank is confident the overall risks in the market are unchanged and that households have been broadly resilient in the face of rising rates.

It also pointed to the potential for lower mortgage rates in the coming months to ease pressure on borrowers, saying “market participants expect Bank Rate to start falling in the second half of 2024.”

Coventry building society has followed other lenders in cutting selected fixed rate mortgage deals for residential borrowers by up to 0.21 percentage points.

HSBC, Barclays, NatWest and Skipton building society have all trimmed their fixed rates down in recent days (see stories below).

Coventry has also cut selected buy-to-let borrowing rates by up to 0.15 percentage points.

The mutual lender is offering a two-year fixed-rate deal for first-time buyers with a 15% cash deposit (85% loan to value) at 5.34%. There is no fee and the deal pays £500 cashback on completion.

Five-year fixed rates for remortgage now start from 4.43% (65% LTV) with a £999 product fee. Equivalent two-year remortgage deals start from 4.86%.

For buy-to-let remortgage, Coventry has two-year fixed rates from 5.43% (65% LTV) with a £1,999 fee, or equivalent five-year rates from 4.87%.

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26 June: Number Of Interest-Only Loans On Way Down

HSBC and Skipton building society are the latest lenders to cut selected fixed-rate mortgage rates in expectation of a summer interest rate cut by the Bank of England, writes Jo Thornhill.

HSBC has reduced the cost of a range of two, three and five-year rates across its residential and buy-to-let rates. Its two-year fixed rate for residential remortgage at 60% loan to value now starts from 4.88% with a £999 fee (the fee-free option starts from 5.18%) and the equivalent five-year fixed rate is now at 4.44% with a £999 fee (or 4.64% with no fee).

For borrowers with 20% equity in their property (80% LTV), rates for remortgage start at 5.64% for a two-year fix with a £999 fee or from 5.04% for a five-year fixed rate, also with a £999 fee.

Skipton has also cut selected residential and BTL deals. For home purchase its two-year fixed rates start from 5.18% with a £495 fee, or five-year rates start at 4.64% with a £1,295 fee. Both deals are available for borrowers with at least a 40% cash deposit.

Its two-year fixed rate for residential remortgage is 5.19% with a £495 fee (at 60% loan to value). The equivalent five-year fixed rate deal is at 4.65% with a £1,295 fee.

The mutual’s 100% loan to value Track Record five-year fixed-rate mortgage for first time buyers remains at 5.79%.

Skipton’s buy-to-let fixed rates now start from 5.47% for a two-year fixed rate with a £995 fee (60% LTV) and from 4.88% for a five-year fixed rate with a £2,995 fee (also 60% LTV).

Nick Mendes at broker John Charcol said: “Following last week’s Monetary Policy Committee (MPC) decision (rates were kept on hold at 5.25%), and with important wage data and general election results on the horizon, markets are anticipating reductions in interest rates very soon.

“Given that until recently most lender repricing has involved increases, there is now potential for bigger reductions. We’ve seen some movement but this latest reprice from HSBC is certainly going to spur on the market.”

The number of mortgage borrowers with interest-only home loans has dropped by 5.4% in the past year, according to new data published by the financial trade body UK Finance.

It shows there were 664,000 interest-only mortgages outstanding at the end of 2023, compared to 702,000 at the end of 2022. Added to this there were 200,000 partial interest-only homeowner mortgages (mortgages that are part interest-only and part capital repayment). This was 9.9% fewer than at the close of 2022, when the figure was 222,000.

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24 June: Market Expects Bank Rate Cut On 1 August

Barclays is cutting the cost of selected fixed-rate residential deals for home purchase by up to 0.31 percentage points, effective from tomorrow (25 June), writes Jo Thornhill.

MPowered Mortgages has also announced cuts of up to 0.15 percentage points across its fixed-rate range for purchase and remortgage, effective today (24 June).

These latest price cuts follow NatWest and Coventry and Suffolk building societies, which lowered their fixed rates at the end of last week.

More lenders are expected to nudge their fixed rates down in the coming weeks as expectation grows that the Bank of England will cut interest rates at the next Monetary Policy Committee meeting on 1 August.

Barclays has reduced its two-year fixed-rate deal for purchase from 4.99% to 4.68% for borrowers with at least a 40% cash deposit (60% LTV). There is an £899 product fee.

The equivalent deal for borrowers with a 15% cash deposit (85% LTV) is cut from 5.14% to 4.93% (£899 fee), and the fee-free option is down to 5.15% from 5.33%.

Over five years, Barclays has lowered its rates from 4.41% to 4.23% on purchase deals at 60% loan to value with an £899 fee. The same deal at 75% LTV is cut from 4.53% to 4.38%.

MPowered has reduced all two-year fixed rates for residential purchase and remortgage. It is offering two-year deals from 4.76% (60% LTV), down from 4.87% with a £999 product fee. Fee-free two-year deals now start from 4.99% (down from 5.09%).

The lender’s five-year fixed rate for home purchase at 65% LTV drops from 4.53% to 4.47% with a £999 fee. While the fee-free equivalent rate is cut from 4.63% to 4.55%.

Mark Harris, chief executive at broker SPF Private Clients, said: “Borrowers will be encouraged by a big lender such as Barclays cutting its rates and others could well follow suit. We expect lots of change over the coming weeks.

“With inflation hitting the 2% target, there will be pressure on the Bank of England to start reducing interest rates at its next meeting in August but lenders could already have reduced their mortgage rates further by then, which will be welcome news for hard-pressed borrowers.”

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20 June: Market Expects Bank Rate Reduction In August

NatWest has cut the cost of fixed-rate mortgage deals by up to 0.17 percentage points ahead of today’s Bank of England Bank Rate announcement, writes Jo Thornhill.

Other lenders could follow NatWest in trimming down their mortgage rates in the coming weeks, even though the Bank of Enlgand held the influential Bank Rate at 5.25% today.

The expectation is that the rate will be cut by the Bank of England at its next meeting on 1 August, probably by 0.25 percentage points, taking it to 5%.

NatWest has agreed to acquire the retail banking arm of Sainsbury’s (Sainsbury’s Bank). Sainsbury’s will pay NatWest £125 million for taking it off its hands. NatWest will gain around one million Sainsbury’s Bank customer accounts as part of the deal, which is expected to be finalised next year.

NatWest has cut selected rates for residential purchase and remortgage, available direct and through brokers, including first-time buyer, shared equity and help-to-buy deals.

The bank’s five-year fixed rates for remortgage now start from 4.26%. This is for an online mortgage deal, which must be applied for and managed solely online. It has a £1,495 fee and borrowers must have at least 40% equity in their property (60% loan to value).

Its equivalent two-year online only deal starts from 4.82%.

Standard five-year fixed rates for home purchase start from 4.40% with a £995 fee (60% LTV), or from 4.83% over two years. Online and green mortgage deals (for homes with an energy performance certificate rating A to C) start from 4.35% (five years) or 4.78% (two years).

Virgin Money is making some changes to selected fixed rate mortgage deals, available through brokers, effective from 8pm today (20 June). It is slightly increasing the rate on its five-year fee-free purchase deal for borrowers with a 25% cash deposit (75% loan to value) from 4.66% to 4.67%.

In contrast, the bank’s five-year fee-free fixed rates for purchase at higher LTVs are being cut. For buyers with a 10% cash deposit (90% LTV) the rate is cut from 5.09% to 5%, and for borrowers with a 5% deposit (95% LTV) the same deal will see its rate shaved down from 5.4% to 5.35%

Virgin’s buy-to-let mortgage deals are getting a more significant rate cut of up to 0.31 percentage points on selected rates. Standard BTL five-year rates with a £995 fee will start from 4.78%.

Suffolk building society has cut a number of its buy-to-let mortgage deals by up to 0.3 percentage points, including rates for ex-pat buy-to-let and holiday homes (for UK nationals living overseas but wanting a property in the UK).

Among the mutual lender’s reduced price deals is a two-year standard buy-to-let deal at 80% loan to value at 5.69%. There is a £199 application fee and a £999 product fee on the deal.

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14 June: Borrowers With Small Deposits Face Rising Costs

TSB has hiked the cost of selected fixed rate deals by up to 0.35 percentage points across residential and buy-to-let borrowing, with rates for borrowers with smaller deposits or equity in their home seeing the most increases.

It follows Clydesdale Bank, part of Virgin Money group, which yesterday announced rate rises across its mortgage ranges, predominantly featuring cost increases for loans at a high loan-to-value ratio (see story below).

Among the changes TSB is raising rates on its fee-free two-year residential remortgage fixed rates at 85% LTV and 90% LTV by 0.15 percentage points. Deals now start from 6.24% (85% LTV).

Two-year remortgage fixed rates at 80% and 85% LTV, with a £995 fee, are also increased by 0.05 percentage points. Rates now start at 5.74%.

Five-year remortgage fixed rates with no fee up to 75% LTV have been hiked by 0.1 percentage points to 4.99%, and the bank’s three-year fixed-rate range for residential borrowing, purchase, home mover and remortgage, have been withdrawn.

Coventry building society, in contrast, has cut two, three and five-year residential deals, available through brokers, by up to 0.3 percentage points. The rate reductions will benefit new and existing borrowers looking for a new fixed rate, including those with just a 5% cash deposit or equity in their home.

The mutual lender is now offering a five-year fixed rate for purchase at 4.8% (85% LTV) with a £999 fee. It is offering a five-year fixed rate for remortgage at 4.82% with no fee (85% LTV).

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13 June: FCA Says 1.1m Mortgages Using Emergency Support

Clydesdale Bank, part of Virgin Money group, is increasing the cost of selected fixed-rate mortgage deals, available through brokers, including those for people with a small cash deposit or equity in their home.

Other fixed rates for residential purchase and remortgage will be cut.

The rate changes, effective from tomorrow (14 June), include increases of 0.2 percentage points on five-year fixed rate deals at 95% loan to value (for borrowers with a 5% deposit or home equity) for residential purchase and remortgage. Rates will now start from 5.54% with a £999 fee.

The lender’s broker-exclusive two-year fixed rate for residential purchase at 90% loan to value is going up by 0.15 percentage points to 5.34% with a £1,499 fee.

But there will also be cuts of up to 0.1 percentage point for residential purchase and remortgage deals for borrowers with at least 25% cash deposit or equity (75% LTV and 65% LTV deals). Clydesdale currently offers a broker exclusive five-year fixed rate at 4.77% with a £1,999 fee at 65% LTV.

Products for existing Clydesdale borrowers looking to switch to a new fixed rate will also be lowered by up to 0.1 percentage point from tomorrow (14 June).

More than 1.1 million borrowers have benefited from the government’s emergency Mortgage Charter scheme set up in June 2023, according to figures released by the financial regulator the Financial Conduct Authority.

The Charter scheme was put in place, by lenders, government and the FCA, to help borrowers who were struggling to afford their monthly payments in the wake of significant interest rate rises and much higher fixed rate deals when they came to remortgage.

Among the commitments of the charter:

borrowers cannot be repossessed in less than one year from their first missed payment
borrowers are able to lock into a new mortgage deal up to six months in advance and be able to request a better like-for-like deal up until their new one starts
borrowers who are up to date with monthly payments have the option to switch to an interest-only mortgage for six months or extend their loan term, also for up to six months, to make payments more affordable.

FCA data shows 159,000 mortgage holders temporarily reduced their monthly payments under the rules of the Charter, although only 263 term extensions were changed, suggesting most borrowers opted for a period of time on interest-only.

The majority of mortgage holders benefited from the scheme in locking into a new mortgage deal up to six months in advance of their remortgage date (while retaining the option to take a different deal at the time, if rates are lower).

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12 June: Market Divides Over Likelihood Of Bank Rate Reduction

Santander has cut selected fixed rates for residential purchase and remortgage, in welcome news for borrowers looking for a new home loan.

The bank, the fourth largest mortgage lender, has cut its five-year fixed rate with a £999 fee for home purchase from 4.38% to 4.28%, for buyers with at least a 40% cash deposit (60% loan to value).

Its two-year fixed rate for purchase with a £999 fee has been cut from 5.18% to 5.11% (85% LTV).

The bank’s purchase deals for new build properties have also been reduced. For example, it is now offering a deal at 95% loan to value at 5.87%. The deal has no fee and pays £250 cashback on completion.

In addition, the 95% LTV three-year new build fixed rate with no product fee and £250 cashback is 5.87%, down from 6.01%.

The rate cuts come as other lenders have been increasing their fixed rates (see stories below). This is because the market increasingly feels the Bank of England won’t cut interest rates when its Monetary Policy Committee (MPC) meets on 20 June.

Previously, experts had believed rates might be cut. But it now appears rates could be higher for longer, with the market suggesting the rate cut might come at the next MPC meeting in August.

Bank of England mortgage lending statistics for the first quarter of 2024, published today (12 June), show potentially growing confidence in the housing market. The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 30.8% from the previous quarter (Q4 2023) to £60.1 billion. This was also 31.2% greater than a year earlier.

However, the data also shows the amount of mortgage arrears is growing, as higher rates continue to bite. While the number of new arrears cases fell by 11.4% in the first three months of the year, the value of total outstanding mortgage balances with arrears increased by 4.2% on the previous quarter to £21.3 billion – 44.5% higher than the same period a year ago, when they were under £15 billion.

The Bank of England Monetary Policy Committee is next due to meet on 20 June. Bank Rate is currently 5.25%.

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11 June: Attention Switches To August Bank Of England Decision

Barclays has increased the cost of selected fixed rate deals by up to 0.2 percentage points across its residential purchase and remortgage ranges, as lenders continue to adjust their rates to reflect changing sentiment in the market.

Halifax has also announced it will tweak first-time buyer and home mover rates upwards by 0.05 percentage points on selected two and five-year fixed rates from Thursday (13 June). The increases will be applied across standard deals as well as the bank’s Green mortgages, shared equity and shared ownership deals, new build and large loan deals.

New rates and deals will be live on the bank’s website on Thursday.

Lenders are increasing rates following increases in swap rates, the fixed interest rates banks use to lend to each other in the wholesale market which dictate the mortgage rates that are offered to customers (see stories below).

Rates have edged up as the market now believes the Bank of England won’t cut interest rates until its August Monetary Policy Committee meeting at the earliest. Previously it had been hoped a rate cut could come at the next meeting on 20 June.

Among Barclays rate lifts is its five-year fixed rate deal for remortgage at 75% loan to value (for those with at least 25% equity in their property) which has gone up from 4.45% to 4.65%. The deal has a £999 fee.

The bank’s two-year fixed rate for purchase at 85% loan to value has risen from 5.18% to 5.28%. There is no fee on this deal.

But while a range of deals will see a rate rise from tomorrow, Barclays has also cut the rates on two of its five-year fixed rate purchase deals at 85% loan to value. The deal with a £999 product fee falls from 4.78% to 4.73%, while the fee-free equivalent deal has been cut from 4.95% to 4.9%.

NatWest has also cut selected fixed rate deals for buy-to-let (BTL) purchase and remortgage by up to 0.2 percentage points, while increasing other fixed BTL rates, in a mixed move similar to that of Barclays. The bank’s rate changes include cuts and increases to Green BTL mortgage deals.

NatWest has dropped the rate on its two-year fee-free fixed rate for remortgage at 60% loan to value from 5.38% to 5.28%. Elsewhere, its five-year fixed rate for home purchase at 60% LTV has been pushed up from 4.43% to 4.63%. This deal has a £995 fee.

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6 June: Lenders Follow Wholesale Market Trends

TSB is increasing selected residential purchase rates by up to 0.2 percentage points from tomorrow (Friday), as growing numbers of lenders push up borrowing costs as hopes fade for a cut in the Bank of England Bank Rate on 20 June, writes Jo Thornhill.

The bank has given notice to brokers that its two and five-year fixed rates for first-time buyers and home movers (at 75% loan-to-value up to 95% for two-year deals and 75% LTV up to 90% on five-year deals) will rise.

Its two-year rate for purchase will rise to 5.19% (75% LTV) with a £995 fee (up from 4.99%), while the five-year equivalent deal will be at 4.79% (up from 4.64%), also with a £995 fee.

Rising swap rates, the fixed rates at which banks lend to each other in the wholesale markets and which influence mortgage rates, have been rising in recent days. This is because the market now expects the Bank of England to cut interest rates in August at the earliest, rather than June.

There has also been discussion about whether a cut in the Bank Rate two weeks prior to the General Election on 4 July might be interpreted as a political move.

Skipton building society has announced increases to selected five-year fixed rate mortgage deals from tomorrow (Friday), including an increase to its 100% LTV Track Record mortgage, a fee-free five-year fixed rate deal for first time buyers, which will rise from 5.55% to 5.79%.

At the same time the lender will cut selected two-year fixed rates for residential purchase and remortgage.

Skipton’s deals for buy-to-let borrowers and product transfer deals (available to existing Skipton customers) are also set to rise.

Virgin Money has increased the cost of selected fix and switch purchase deals by 0.1 percentage points.

The five-year deal, which offers the opportunity to switch penalty-free after two years, now starts from 5.34% (90% LTV) with a £1,495 fee. The bank’s two-year fixed rate for home purchase at 90% LTV has also risen, by 0.05 percentage points, to 5.44%, with a £995 fee.

Selected buy-to-let rates have been cut marginally, by 0.02 percentage points. Deals for BTL with a 3% fee now start from 4.03%.

Vida Homeloans, the specialist buy-to-let lender, has bucked the trend and cut selected rates across its residential and BTL deals by up to 0.35 percentage points. The lender’s deals, available through brokers, start from 4.94% with a 6% fee (75% loan to value) on its standard five-year fixed rate buy-to-let product.

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4 June: Building Societies Pulling High LTV Deals

HSBC has increased the cost of selected fixed-rate mortgage deals across its residential and buy-to-let ranges, writes Jo Thornhill.

Its new remortgage rates, available direct and through brokers, start from 4.99% for a two-year fixed rate (60% LTV) with a £999 fee and 4.54% over five-years.

A number of the bank’s product transfer deals (rates available to existing HSBC customers looking to switch), have also been increased.

Brokers are braced for more lenders to increase rates this week. This is due to rises in swap rates, the rates banks use to lend to each other, as hopes fade for a cut to the Bank of England Bank Rate in June.

The reduction – from the current rate of 5.25%, probably to 5% – is now expected in August.

A number of smaller lenders, including the Hanley Economic, Principality, Saffron and Vernon building societies, have withdrawn selected mortgage deals at higher loan-to-value ratios, such as 90% LTV and 95% LTV.

David Hollingworth at broker London & Country Mortgages does not consider this will become a wider trend: “These deals may be another casualty of higher swap rates, but the overall product withdrawal numbers are tiny so it is nothing to get too spooked about.

“The smaller mutual building societies tend to focus more on higher loan-to-value deals as they can’t compete at the lower LTV end of the market. They may have taken enough business or need to review their rates if funding costs are shifting.”

UK Finance has published figures showing that, while the number of borrowers taking out long-term mortgages dipped slightly in the first three months of the year, the overall number remains at a historically high level. The trend for mortgages at 35 years has grown as a way of making monthly mortgage payments more affordable.

The trade body’s figures show 21% of first-time buyers took a mortgage at 35 years in quarter one of 2024. This compares to less than 10% in 2022 (see graph – source: UK Finance).

Bank of Ireland is increasing rates across its full range of fixed rate residential mortgage products up to 95% loan to value. Among the new rates for purchase and remortgage, available from tomorrow through brokers, is a five-year fixed rate at 4.95% (75% LTV) with a £995 fee. It is offering a five-year fixed rate at 5.05% (85% LTV) with the same fee.

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24 May: Society Unveils Fee-Free First-Time Buyer Deal

Coventry building society is cutting selected fixed rates for residential purchase and remortgage by up to 0.28 percentage points, continuing the trend set by other major lenders in recent days, writes Jo Thornhill.

The mutual lender has reduced the cost of deals, available through brokers, for new customers and existing borrowers looking for a new rate.

It is offering a two-year fixed-rate deal at 5.05% (65% LTV) with a £999 fee. The equivalent five-year rate is at 4.58%.

Also new from Coventry is a fee-free first-time buyer product for those with at least 20% deposit at 5.38% with £500 cashback on completion.

Coventry today confirmed it will buy Co-operative Bank by signing a £780 million purchase agreement. The deal, which is expected to complete in early 2025, will create a financial group with combined assets of £89 billion. Coventry will keep its mutual status, which means it is owned by its ‘member’ customers.

The news comes as fellow mutual Nationwide building society, Britain’s biggest, has moved a step closer to securing its takeover deal with Virgin Money. Virgin’s shareholders voted on Wednesday this week to accept the deal, with 89% voting in favour.

Neither Coventry’s or Nationwide’s members will be given a vote on their respective deals.

Mark Harris at mortgage broker SPF Private Clients said: “Some momentum has emerged over the past couple of weeks with a number of big lenders reducing their fixed-rate mortgages on the back of the decline in [wholesale] ‘swap’ rates.

“More recently the markets have pushed back expectations of a rate cut [in June] so we will see whether this trend continues in the short term and what impact that has on mortgage rates.”

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23 May: Attitudes Vary To News Of Inflation Dropping To 2.3%

TSB is cutting fixed rate mortgage deals by up to 0.4 percentage points, effective tomorrow (Friday), writes Jo Thornhill.

The bank will reduce rates on two and five-year fixed rates for home purchase and remortgage, including first time buyer, shared ownership and shared equity deals. The new rates will be live on the lender’s website tomorrow morning.

It follows Halifax and Santander, which both slashed fixed rates yesterday (see below). Halifax will unveil its new rates tomorrow.

Santander’s new rates, available direct and through brokers, start from 4.82% with a £999 fee for a two-year fixed rate remortgage deal. This is for borrowers with at least 40% equity in their property. Equivalent two-year deals for home purchase start from 4.8%.

Over five-years Santander is offering a remortgage deal at 4.42% (60% loan to value) with a £999 fee. The same deal for purchase is at 4.38%.

More lenders are expected to trim down their fixed rates in the coming days in response to the more positive news on inflation this week, and the growing expectation that an interest rate cut by the Bank of England is on the cards.

But Barclays has bucked the trend in announcing an increase to selected two and three-year fixed rates from across its range by as much as 0.3 percentage points, also from tomorrow (24 May).

The rate increases affect deals for new customers as well as rates on product transfer deals (rates for existing customers looking for a new fixed rate).

While a handful of Barclays’ fixed rates for purchase will be reduced, the majority of the bank’s rate changes are upwards. This includes the lender’s two-year fixed rate for remortgage at 60% loan to value, which will rise from 4.61% to 4.86%. This deal has a £999 fee.

Its two-year fixed rate for purchase or remortgage at 75% loan to value will rise from 4.75% to 5.05%. This deal has a £1,999 fee.

Nick Mendes at broker John Charcol said: “Mortgage rates have eased back a touch in recent weeks, but we are seeing a mixture of attitudes between lenders on pricing. Halifax, Santander and TSB are reducing rates, while Barclays is increasing.

“Anyone approaching the end of a fixed rate deal should not delay. There is still uncertainty around rates and the reductions we’ve seen of late could be withdrawn and reversed at short notice.”

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22 May: More Lenders Expected To Follow Suit

Two major mortgage lenders, Halifax and Santander, are cutting fixed-rate deals following today’s news on a steep fall in the rate of inflation and the growing expectation of a cut in the Bank Rate, writes Jo Thornhill.

Halifax is cutting two and five-year fixed rates for residential borrowers by up to 0.19 percentage points, effective from Friday (24 May).

Santander for Intermediaries is slashing selected rates for residential and buy-to-let borrowers, available through brokers, by up to 0.27 percentage points, effective from tomorrow (23 May).

These latest rate cuts are likely to bring both banks in line with the best buys in the market.

Leeds building society is also cutting rates (see below).

The latest Office for National Statistics inflation data, published this morning, shows that the rate fell sharply to 2.3% in the year to April (from 3.2% in March).

This has fuelled market expectations of an interest rate cut this summer. However, inflation may not have fallen enough for an early interest rate cut by the Bank of England next month.

The ONS figures for May will be released on 19 June, with the next Bank Rate decision due on 20 June.

A number of lenders have been repricing their fixed-rate deals downwards in response to changing market sentiment on rates. Others are now expected to follow Halifax and Santander in trimming rates.

David Hollingworth, director at broker L&C Mortgages, said: “It’s good news to see the headline rate of inflation drop back so much closer to the Bank of England target rate of 2% but at 2.3% it may also bring some disappointment for those looking for signs of an imminent cut to base rate.

“The figure is at the higher end of forecasts and could mean Bank Rate is held at a higher level for longer.

“Mortgage rates have eased back a touch in recent weeks, but today’s figures may well hold back the chance for that to become a stronger trend. A big fall in inflation was expected and therefore already priced into fixed rates.”

Leeds building society has cut selected fixed mortgage rates by up to 0.2 percentage points. Deals receiving a haircut include those at 75% loan to value and 90% loan to value.

The mutual lender is offering a two-year fixed rate at 5.14% (85% LTV) with a £999 fee. It has also launched a new fee-free five-year fixed-rate deal for home buyers with a 5% cash deposit. The rate is 5.39%.

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21 May: Tumbling Inflation Seen As Key To Bank Rate Cut

HSBC has unveiled its new fixed-rate mortgage deals for residential and buy-to-let borrowers, following a cut of up to 0.18 percentage points, first announced last week (see stories below).

Inflation is expected to fall steeply when the April figure is announced this Wednesday due to the drop in energy prices in recent months. This may prompt more lenders to adjust their pricing downwards as it becomes more likely the Bank of England will cut interest rates in response to falling inflation, either in June or August.

Among HSBC’s lower rates for home purchase and remortgage customers, available direct and through brokers, are a two-year fixed-rate deal for purchase at 4.79% with a £999 fee, and a five-year equivalent fixed rate at 4.4%, also with a £999 fee.

Both deals require a 40% cash deposit towards the purchase (60% LTV).

For remortgage, the bank is offering a two-year fixed-rate deal at 4.84% with a £999 fee, or a rate at 4.44% over five-years. Both deals require borrowers to have at least 40% equity in their property.

Residential deals for existing HSBC customers looking for a new fixed rate through a product transfer deal have also been cut by up to 0.11%. A five-year fixed rate at 60% loan to value (LTV) now starts from 4.39% with a £999 fee.

Buy-to-let rates for purchase and remortgage have been cut by up to 0.14 percentage points. The lender is offering a two-year fixed rate for remortgage at 4.69% with a £1,999 fee (60% LTV) or a five-year equivalent deal at 4.48%.

Virgin Money is cutting the cost of selected fixed rate deals, available exclusively through brokers, by up to 0.21 percentage points from tomorrow (22 May).

Reductions will be applied on residential purchase and remortgage deals, selected product transfer deals (for existing Virgin borrowers) and on a range of buy-to-let product transfer deals.

The bank, whose shareholders are due to vote this week on a potential takeover by Nationwide building society, will publish its new mortgage rates live on its website tomorrow morning. It currently offers a five-year fixed rate for remortgage at 65% LTV at 4.64% with an £895 fee.

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16 May: Sentiment Nudges Towards Early Bank Rate Cut

Barclays and HSBC are the latest lenders to slash the cost of fixed-rate mortgages, effective tomorrow (17 May), writes Jo Thornhill.

They follow MPowered Mortgages, which cut the cost of selected deals earlier this week.

However, other banks, including Santander and NatWest, have increased rates in recent days (see stories below), although brokers expect an interest rate cut by the Bank of England within the next few months, which would prompt lenders to follow suit.

HSBC is reducing a range of fixed-rate deals for residential and buy-to-let borrowers, both new customers and existing ones looking to switch to a new rate.

Reduced rates for first-time buyers, home movers, remortgage customers and deals for energy-efficient homes will be live on the bank’s website tomorrow (Friday) morning.

It currently offers two-year fixed rates for residential remortgage from 4.88% with a £999 fee (60% LTV) and five-year equivalent deals from 4.48% (also 60% LTV).

Barclays is cutting rates for new and existing customers by up to 0.45 percentage points. It is offering a five-year fixed rate for home buyers at 4.34% (down from 4.47%) with an £899 fee. This is for borrowers with at least 40% deposit to put towards the purchase.

The bank’s five-year fixed rate for remortgage falls to 4.32% from 4.77%, also with an £899 fee and available at 60% LTV (borrowers need 40% equity in their property).

Its two-year fixed rate for remortgage is now 4.61% (60% LTV), down from 4.94% previously. This deal has a £999 fee.

Nick Mendes broker at broker John Charcol said: “Following last week’s announcement that the Bank of England Bank Rate would remain unchanged, there has been a noticeable shift in market sentiment.

“Financial markets have adjusted their forecasts, signalling a rate cut could be due soon. Given most lenders have increased their fixed rates in recent weeks, it means there is now significant potential for rate reductions in the coming fortnight.

“Barclays’ and HSBC’s rate cuts are a positive development and will no doubt prompt similar action from other lenders. It is anticipated this could increase competition among lenders, potentially leading to more favourable mortgage rates for consumers.”

LiveMore, the specialist mortgage lender for people aged over 50, has cut fixed rates across its product range by up to 0.58 percentage points. The reductions apply on retirement interest-only mortgages, standard capital and interest mortgages, as well as on lifetime mortgages for equity release, among other deals.

The lender’s LiveMore 1 standard capital and interest and standard interest-only five-year fixed rate deals now start from 5.99% (up to 70% LTV). There is a fee of 0.55%. Equity release rates now start from 6.11%

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14 May: Lender Tactics Vary In Run-Up To Bank Rate Cut

NatWest is increasing the cost of selected two and five-year fixed-rate residential mortgages by 0.05 percentage points. The increase will be applied on deals for home purchase, including first-time buyer rates, and for remortgage, effective tomorrow (Wednesday).

The move comes despite falls in wholesale interbank borrowing rates, which suggests NatWest is attempting to control demand for its products so as to be able to maintain service standards, and not responding to fears that borrowing costs generally are set to remain high.

There is a growing expectation that the Bank of England will trim the Bank Rate from 5.25% at some point over the summer.

NatWest already increased rates for new borrowers in April and hiked the cost of product transfer deals (available to existing customers coming to the end of a deal and looking for a new rate) on 8 May.

Its two-year fixed rate for home purchase will now increase from 4.77% to 4.82% (60% LTV) with a £1,495 fee. The five-year equivalent rises from 4.4% to 4.45%.

For residential remortgage, NatWest will now offer a two-year fee-free deal from 5.22% at 60% LTV (up from 5.17%), or fee-free five-year fixed rates from 4.67% (up from 4.62%).

Nick Mendes at broker John Charcol said: “Given that most lenders have raised their rates recently, including NatWest today, I think hopefully there should now be scope for some reductions to fixed rates in the next two weeks.”

Santander has pushed up the cost of fixed rate deals for new and existing customers (those looking for product transfer deals) by up to 0.33 percentage points. The rise comes despite the Bank of England freezing the Bank Rate at 5.25% on Thursday last week.

The high street bank, the fourth biggest mortgage lender, last increased rates on 3 May.

The bank’s new deals and rates include increases to selected residential purchase and remortgage rates, as well as buy-to-let borrowing. It is offering five-year fixed rates for residential remortgage from 4.5% with a £999 fee (60% LTV) and two-year equivalent deals from 4.94%.

The lender’s maximum loan size on selected residential fixed rates will also increase from £570,000 to £1 million at 90% loan to value.

MPowered Mortgages has cut two and five-year fixed-rate mortgage deals across its range and is offering market-leading deals for home purchase. It is the lender’s second rate cut in under a week.

The lender, which offers deals only through brokers, has a five-year fixed rate for home purchase at 4.37% (down from 4.59%) with a £999 fee. This is for borrowers with at least a 40% cash deposit to put towards their purchase (60% loan-to-value).

Over two years, MPowered’s equivalent fixed-rate deal for purchase has been slashed to 4.67% (down from 4.84%), also with a £999 fee.

Swap rates, the rates at which banks lend to each other and which therefore influence fixed mortgage rates, have been falling since the Bank of England kept the Bank Rate frozen at 5.25% last week. Experts now predict the Bank Rate will be cut before the end of the summer.

MPowered’s remortgage rates are higher than its purchase rates over two and five years, but they are still competitive. It is offering a two-year deal at 4.77% and five-year rates from 4.43% (both at 60% LTV with a £999 fee). In contrast, Natwest has a five-year fixed rate for remortgage at 4.32% (60% LTV), for example, but it has a bigger fee at £1,495.

David Hollingworth, at broker L&C Mortgages, said: “It’s good to see a lender taking the opportunity to compete harder. Hopefully this is an indication that the recent increases in fixed mortgage rates are calming down.”

Matt Surridge, sales director at MPowered, said: “The swap markets are moving at pace. It is important that as a responsible lender we are able to react and pass on any savings we can to borrowers. I’m therefore really pleased we are one of the first, if not the first to cut rates this week having already cut rates once in the past week.”

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10 May: High LTV Borrowers Qualify For Reduced Rates

TSB has cut selected residential fixed mortgage rates, effective today, by up to 0.15 percentage points, writes Jo Thornhill.

The rate reduction comes as the Bank of England kept the Bank Rate on hold yesterday at 5.25%.

Andrew Bailey, governor of the Bank, gave his clearest indication yet that interest rates are set to fall in the coming months. Economists now predict this could be as soon as June, depending on the next inflation figure from the Office for National Statistics on 22 May.

The Bank’s next interest rate decision will happen on 20 June.

TSB’s rate cut is applied on two, three and five-year fixed rates for purchase and remortgage, on deals up to 75% loan to value. This applies to borrowers with at least a 25% cash deposit or equity in their home.

The lender hiked its fixed rates up by 0.35 percentage points at the end of April, along with a swathe of other lenders increasing fixed rate costs (see stories below).

Today’s rate cut brings TSB’s deals back in line with other leading offers, although its prices remain above the very keenest rates available.

The lender is offering a two-year fixed rate for home purchase at 4.89% with a £999 fee (60% loan to value), and three-year equivalent deals at 4.74%, for example.

Its five-year fixed rate deal for remortgage also looks competitive at 4.59% with a £999 fee (60% LTV).

Matt Smith at property website Rightmove said: “After a few weeks of mortgage rate increases, we’ve seen early signs that this current run of increases has peaked and we’d expect that average rates will begin to trickle down again soon.

“Inflation still seems to be heading in the right direction, a position the Bank has highlighted in its decision this week, with a view that it will fall below the 2% target in the coming months. The market is still assuming that the first Base Rate cut will happen in the summer, and today’s decision is unlikely to change that view.

“All eyes now turn to the publication of April’s inflation data (on 22 May), which is the next key milestone and is likely to determine the immediate direction of mortgage rates in the UK.”

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8 May: Lenders Vary Tactics In Uncertain Market

Barclays has cut the cost of selected fixed-rate mortgage deals for residential home purchase, for borrowers with at least 15% cash deposit, by up to 0.39 percentage points.

The bank’s two-year fixed rate at 85% loan-to-value (LTV) is cut from 5.23% to 4.99% with an £899 fee. The fee-free equivalent deal is cut from 5.57% to 5.18%.

Over five years, the lender’s purchase deal is cut from 4.92% to 4.78% (also 85% LTV with an £899 fee). The fee-free version is cut from 5.13% to 4.95%.

MPowered Mortgages has cut selected fixed rate mortgage deals by up to 0.65 percentage points, effective today, bucking the trend among other lenders to raise fixed rates.

The lender’s new three-year fixed rate for remortgage, available through brokers, has fallen to 4.49% with a £999 fee. This deal, which is a market-leader, is for borrowers with at least 40% equity in their property.

The equivalent three-year deal for home purchase is now fixed at 4.59%. Fee-free deals are available over three-years starting at 4.79% for purchase (also at 60% LTV) or 4.69% for remortgage.

MPowered’s two-year fixed rates have also been trimmed down with deals for purchase starting at 4.84% with a £999 fee (60% LTV). The fee-free two-year fixed rate for remortgage is now available from 5.15% (60% LTV).

HSBC and NatWest are both hiking the cost of fixed-rate product transfer deals – those available to existing customers looking for a new fixed rate.

Along with a number of banks and building societies, these lenders increased the cost of fixed-rate borrowing for new customers at the end of last month (see stories below).

HSBC is increasing fixed rates for existing residential and buy-to-let borrowers looking for a new deal, and for those looking to switch to a new fixed rate and increase their borrowing. Two, three, five and 10-year fixed rate product transfer deals are increasing at 60% LTV up to 90% LTV.

HSBC’s two-year fixed-rate product switch deal has risen to 4.78% from 4.63%. There is a £999 fee (60% LTV). Its five-year equivalent deal has gone up to 4.39% from 4.32%, also with a £999 fee.

NatWest is raising the cost of its two and five-year fixed rate product transfer deals by up to 0.12 percentage points. The bank’s new two-year rate is at 4.89% with a £995 fee (60% LTV). Five-year deals now start from 4.53% with the same fee (60% LTV).

Virgin Money has increased the cost of selected residential and buy-to-let fixed rate deals, through brokers, by up to 0.2 percentage points. Its core residential purchase two and five-year fixed rates and product transfer deals at 65% and 75% loan to value are all set to rise.

The lender is now offering a five-year fixed rate for residential remortgage at 4.79% with a £995 fee (65% LTV). The two-year equivalent deal is now at 5.09%.

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3 May: Rises Will Apply To New £5k Deposit First-Time Buyer Deal

Yorkshire building society has announced it is raising the cost of selected mortgage deals from today, as Santander’s new higher rates also kick in, writes Jo Thornhill.

Yorkshire Building Society has increased the cost of selected fixed rate residential mortgage deals by up to 0.4 percentage points with immediate effect. This includes an increase to the mutual lender’s £5,000 deposit mortgage for first-time buyers – a fee-free, five-year fixed rate deal launched last month – from 5.99% to 6.39%.

A YBS spokesperson said: “We have maintained the rate of our £5k deposit mortgage product since its launch to enable the first-time buyers it is aimed at to benefit as much as possible.

“However, funding costs in the market have increased materially, and so we need to appropriately reassess its pricing. We remain confident that this product represents good value for customers in this segment of the market.”

For remortgagers, YBS is now offering a five-year fixed rate at 4.79% with a £1,495 fee (75% loan to value). The equivalent two-year fixed rate is now priced at 5.39%.

For home purchase the equivalent five-year rate is 4.69% (also 75% LTV) and over two years rates start from 4.99%.

The YBS hikes coincide with Santander’s rate increase to its fixed rate mortgage range announced yesterday – the second in less than a week (see stories below).

The bank’s residential fixed-rate deals have risen by up to 0.26 percentage points and buy-to-let deals by up to 0.22 percentage points. The lender is now offering a two-year fixed rate for residential purchase or remortgage at 4.88% with a £999 fee (60% LTV) and a five-year equivalent deal at 4.47% (also 60% LTV).

Both Santander and YBS deals are available direct or via brokers.

A spate of rate rises by a number of leading lenders this week had left Santander towards the top of the best-buy tables for some rates and deals which can lead to an unwanted surge in business coming through brokers. As well as responding to wider wholesale market costs, lenders can raise mortgage rates to control business volumes.

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30 April: Borrowers Favouring Flexibility Of Two-Year Deals

Nationwide building society and Santander have unveiled their new fixed rate mortgage deals following rate increases of up to 0.25 percentage points and 0.2 percentage points respectively, announced yesterday (see stories below).

Despite the rate hikes, both lenders remain close to the top of the best buy tables for two and five-year fixed rates for purchase and remortgage.

Over two years, the cheapest fixed rate for remortgage is now at 4.77%, on offer from NatWest with a £1,495 fee (60% LTV). Nationwide and Santander have equivalent deals at 4.79% with a lower £999 fee.

The best two-year fixed rate for purchase is on offer from Lloyds Bank at 4.61% with a £999 fee (60% LTV). This is a direct-only deal and not available through brokers.

The best buy five-year fixed rate for remortgage is now 4.4%, on offer from Santander (at 60% LTV) with a £999 fee (previously the lowest rate was 4.28% with NatWest).

Net mortgage approvals for house purchase increased from 60,500 in February to 61,300 in March, according to figures from the Bank of England’s Money – the highest number of home loan approvals since September 2022. Over the same period, net approvals for remortgage with a new lender fell from 37,700 to 34,200, suggesting more borrowers may be sticking with their existing lender to avoid a new affordability assessment and to pay lower fees.

NatWest and Nationwide are also both offering keenly-priced five-year fixed rates for remortgage at 4.42% and 4.49% respectively (both at 60% LTV). Nationwide’s deal has a £999 fee, while NatWest’s is £1,495. Nationwide offers an equivalent deal at 4.44% with a £1,495 fee for mortgages of £300,000 or more.

Nationwide is offering the lowest five-year fixed rate deal for home purchase at 4.34% with a £1,495 fee, but this is for loans of £300,000 or more and for borrowers with at least 40% cash deposit towards the purchase (60% LTV).

For smaller loan sizes, the best five-year purchase rate is now at 4.4% with a £999 fee, on offer with Santander.

Virgin Money is increasing the cost of selected fixed rates by up to 0.2 percentage points from tomorrow. Among the deals seeing rate hikes are residential purchase and remortgage rates and the Fix and Switch range. These are five-year fixed rates for purchase or remortgage that have an option to switch to a different deal (with Virgin or any other lender), penalty-free, after two years.

MPowered Mortgages has an equivalent two-year purchase deal at 4.72% with a £999 fee (60% LTV). NatWest’s two-year fixed rate for purchase is now 4.77% with a £1,495 fee. Both Nationwide and Santander have equivalent deals over two years starting from 4.79%.

Nick Mendes at broker John Charcol says more borrowers are opting for two-year deals, where previously five-year rates had been more popular. This is likely to be because borrowers are hopeful rates will soon start to fall.

The differential in rate between two and five-year fixed rates has narrowed (five-year fixed rates used to be much lower relative to two-year fixed rates), and taking a two-year fix offers greater flexibility as borrowers can switch to a lower rate sooner if rates fall.

Mendes said: “If inflation continues to pose a challenge and doesn’t fall as quickly as expected, we should expect the Bank of England Bank Rate to be higher for longer, which would in turn result in a period of higher mortgage rates. But, given the current movement and overall landscape I do expect to see a reduction in August and potentially one more by the end of the year.”

Skipton building society is bucking the trend of rising rates by cutting selected fixed rate mortgages from tomorrow (1 May), including its innovative Track Record product for first-time buyers. Track Record, available to FTBs with a proven record of paying monthly rent for the past year, is a 100% loan to value, fee-free, five-year fixed rate deal. The rate is being cut from 5.65% to 5.55%.

It is also cutting the cost of fee-free two-year fixed rates for home purchase for borrowers with just a 5% or 10% cash deposit. At 90% loan to value the rate will fall from 6.16% to 5.99% and at 95% LTV the rate will fall from 6.19% to 6.08%. Skipton is also reintroducing remortgage deals up to 90% loan to value.

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29 April: Market Adjusts To Negative Bank Rate Sentiment

Nationwide building society, the UK’s second largest lender, is increasing selected fixed rates for new borrowers by up to 0.25 percentage points from tomorrow (30 April).

It follows other major lenders, NatWest and Santander, which have both announced rate hikes to fixed rate borrowing, also effective from tomorrow.

Nationwide, which has offered market-leading fixed rates for purchase and remortgage in recent weeks, will unveil its new rates and deals tomorrow morning.

Santander has said it will increase its rates, available direct and through brokers, by up to 0.2 percentage points for new borrowers (purchase and remortgage), as well as for existing customers looking for a product switch fixed rate.

The lender’s buy-to-let fixed rates will rise by up to 0.25 percentage points. The new higher rates and deals from across its range will be available from tomorrow.

NatWest is increasing the cost of its two and five-year fixed-rate purchase and remortgage deals, available direct and through brokers, by up to 0.22 percentage points.

It follows increases of up to 0.1 percentage points to its fixed-rate product transfer deals last week.

NatWest’s new two-year residential purchase fixed rates start from 4.77% with a £1,495 fee (60% loan to value), up from 4.64%. The five-year equivalent deal will rise to 4.4%, up from 4.19%.

For remortgage, the bank’s two-year fixed rates now start from 4.82% (up from 4.68%) or from 4.42% over five-years (up from 4.28%), both with a £1,495 fee and at 60% LTV.

First-time buyer rates, deals for shared equity purchase and green mortgage products (for homes with an energy performance certificate rated A or B), will also all rise in cost by up to 0.22 percentage points from tomorrow.

Buy-to-let two and five-year fixed rates for purchase and remortgage are also set to increase by the same amount.

Nick Mendes at broker John Charcol said: “These latest rate rises were inevitable, following market movements and competitor repricing last week in which most high street lenders increased fixed rates (see stories below).”

Halifax for Intermediaries is increasing its maximum loan to value ratio on part-repayment/ part-interest-only mortgages from 75% to 85% from tomorrow (30 April). The maximum LTV on pure interest-only loans remains at 75%.

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26 April: Market Heads In ‘Higher For Longer’ Direction

Britain’s biggest mortgage lender Halifax, along with its specialist lending arm BM Solutions, has confirmed the cost of its new fixed rate deals following its announcement earlier in the week that it would hike rates by up to 0.2 percentage points.

Halifax’s remortgage deals now start from 4.83% for a two-year fix (60% LTV) with a £999 fee (up from 4.69%), or 4.43% (up from 4.33%) for a five-year deal.

Halifax’s move follows similar rate rises by leading lenders this week, including HSBC, Virgin Money, TSB and NatWest (see stories below).

As well as increases to remortgage rates, Halifax has increased the cost of borrowing across its range of home mover, first-time buyer, and product transfer and further advance deals (for existing customers looking for a new deal and to borrow more).

BM Solutions is offering a two-year remortgage buy-to-let deal at 4.97% with a £1,499 fee (65% LTV) and five-year deals at 4.6%. Lower rates are available with a 3% fee.

Nick Mendes, at broker John Charcol, said: “The primary driver of this latest round of fixed rate mortgage repricing is rising swap rates. These rates are heavily influenced by gilt yields (government bond rates), which are impacting all lenders.

“Recent hikes in mortgage rates have mirrored rises in gilt yields, spurred by market revisions in the anticipated timing and magnitude of interest rate cuts by central banks. It now looks like interest rates will be higher for longer.”

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24 April: Market Responds To Inflation Rate News

HSBC, Barclays, NatWest, Leeds building society and Accord, part of Yorkshire building society, are increasing selected fixed mortgage rates in response to rising borrowing costs.

Swap rates – the rates at which banks and building societies lend to each other – increased at the end of last week in response to the latest inflation figures.

The official inflation rate fell to 3.2% (from 3.4%) in March, but this was a smaller reduction than expected. It is likely to mean interest rates will remain higher for longer, with a rate cut by the Bank of England now more likely in the autumn rather than June, as had been hoped.

HSBC is increasing fixed rates on a range of residential and buy-to-let mortgage deals, and on its product switcher deals for existing customers looking for a new rate.

It is now offering two-year fixed rates for remortgage from 4.88% (previously 4.68%) with a £999 fee (60% LTV) and equivalent five-year rates from 4.48% (4.33%).

Among the rate rises are two, three and five-year purchase and first-time buyer deals from 60% to 90% loan to value (LTV) and residential remortgage rates from 60% to 75% LTV.

For home purchase, HSBC has two-year rates from 4.83% (4.68%) with a £999 fee and five-year rates from 4.48% (4.24%), also with a £999 fee (both deals are at 60% LTV).

Barclays is increasing selected fixed rates for residential purchase and remortgage. The lender’s rate rises include an increase in its five-year fixed rate for remortgage from 4.67% to 4.77% (at 60% LTV with a £999 fee).

Two-year equivalent remortgage rates will rise from 4.84% to 4.94%.

NatWest has increased its two and five-year fixed-rate product switcher deals by up to 0.1 percentage points. The new rates, effective tomorrow, will start from 4.99% over two years with a £495 fee, or from 4.49% over five-years with a £995 fee (both deals are at 60% LTV).

Leeds building society is increasing selected residential fixed rates, including interest-only mortgage deals, by up to 0.2 percentage points.

Accord has raised the cost of selected residential fixed rates by up to 0.4 percentage points.

Accord’s new two-year fixed rates start from 5.48% with a £1,995 fee (75% LTV) and five-year rates start from 5.22%, also with a £1,995 fee and at 75% LTV.

For home purchase Accord’s rates are now at 5.29% for a two-year fix (£1,995 fee at 75% LTV) and equivalent five-year fixed rates start from 4.95%.

Virgin Money is increasing selected fixed rates for new and existing customers (product transfer deals) by up to 0.1 percentage points.

The lender’s Fix & Switch fee-saver deal for home purchase, for borrowers with a 10% cash deposit (90% LTV), has been increased by 0.05% to 5.52%. The five-year fixed rate for its Green New Build homes rises by the same amount to start from 4.44% (60% LTV).

Product transfer deals are set to rise by 0.1 percentage points, with five-year fixed rates now starting from 4.38% (60% LTV).

TSB is increasing selected fixed rates for home purchase and remortgage by up to 0.35 percentage points, effective tomorrow (25 April).

Deals for shared ownership and shared equity mortgages are set to rise by up to 0.75 percentage points. At the same time the lender is withdrawing all two-year tracker rate mortgage deals. Two and five-year buy-to-let rates will also rise by up to 0.45 percentage points.

The bank’s new two-year fixed rate for remortgage will start from 5.19% (previously at 4.84%) with a £995 fee (60% LTV) and five-year equivalent deals will start from 4.69% (4.39%).

Nick Mendes at broker John Charcol said: “This move from HSBC leaves Nationwide building society and NatWest leading from the front with their rates for purchase and remortgage deals for new borrowers (NatWest has increased product switcher rates for existing customers). This will inevitably mean their service levels will come under pressure which is likely to lead to these lenders also making similar moves by increasing rates over the coming days.”

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17 April: Market Adjusts As Rate Cut Date Remains Uncertain

Virgin Money has made changes to selected fixed rates, through brokers, for residential and buy-to-let borrowers, reducing some deals while increasing the cost of others, writes Jo Thornhill.

Deals in the lender’s Fix and Switch product range (five-year fixed rate deals with an option to switch deal penalty-free after two years) for residential home purchase have been pushed up by 0.1 percentage points with rates now starting from 5.18% (60% loan to value), while Fix and Switch remortgage deals have risen by 0.05 percentage points and now start at 4.94%.

Two-year fixed rate deals for home purchase with a £995 fee up to 85% LTV have also been increased by up to 0.15%.

Virgin has tweaked down the rate on its residential five-year fixed rate for remortgage with an £895 fee (75% LTV) by 0.05 percentage points to 4.54%.

Buy-to-let two and five-year fixed rates with 1% fee will be reduced by up to 0.07%, starting from 4.52%. Its BTL five-year fixed rate at 60% LTV with a 3% fee has been cut by 0.08 percentage points to 4.09%.

Santander for Intermediaries has cut selected residential fixed rates by up to 0.24 percentage points. It follows cuts by the bank of up to 0.21 percentage points at the end of March.

The Spanish-owned bank has also reduced selected fixed rate deals for buy-to-let purchase and remortgage, available through brokers.

Santander is offering five-year fixed rates for residential remortgage from 4.3%, three-year rates from 4.57% and two-year rates from 4.65%. These deals are available at 60% loan to value and have a £999 product fee.

TSB has cut selected fixed rates by up to 0.2 percentage points. Its five-year fixed rate for home purchase has fallen to 4.29% with a £995 fee, for borrowers with at least a 40% cash deposit (60% loan to value).

The rate is close to the market leading five-year rates for purchase which now start from 4.17% (see stories below).

TSB’s 95% five-year fix for first-time buyers and home movers with just a 5% deposit is now at 5.29% with no fee.

Two- and three-year fixed rates for first-time buyers and home movers with up to a 20% cash deposit have been cut by up to 0.15 percentage points. The two-year fixed rate is now at 4.94% with a £995 fee (80% LTV).

Two-year fixed rates for remortgage for borrowers with at least 20% equity in their property (80% LTV) are now at 5.34% with a £995 fee or 5.74% with no fee.

TSB’s five-year fixed remortgage rates start from 4.39% (60% LTV) with a £995 fee or from 4.59% with no fee.

Bank of Ireland has increased fixed rates on its bespoke product switch deals, for existing customers looking for a new fixed rate. For example, its two-year fixed rates are up from 5.16% to 5.26%, while five-year rates have risen from 4.85% to 4.95%.

Both deals have a £1,495 product fee and are available at 60% LTV.

Nick Mendes, mortgage broker at John Charcol, said: “We will likely see a mixed bag with rates over the next few weeks, as markets continue to second guess what the future holds.

“Bank of England bank rate is widely expected to fall in June, but there are growing concerns that this could now be pushed back to August with the likelihood of a Fed rate decrease also looking unlikely before then.

“As a result we should expect any mortgage rate reductions to potentially be pulled quickly, especially those that are amongst the best buys.”

The next Bank of England Bank Rate decision is on 9 May. The less-than-expected fall in the annual rate of inflation, announced today (from 3.4% to 3.2%), has increased speculation that the Bank may not cut rates until the autumn at the earliest.

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9 April: Hopes For Sustained Competition Between Lenders

HSBC has cut selected fixed rates by up to 0.11 percentage points as it aims to grab a larger share of the mortgage market.

Among the standout deals in its latest round of repricing is a two-year fixed rate for remortgage at 4.68% with a £999 fee.

It brings the high street bank in line with the current best buy two-year remortgage deals on offer from NatWest, at 4.69% with a £995 fee, and also from Barclays, which has a deal at 4.68% with no arrangement fee. Borrowers need at least 40% equity in their property to be eligible for these deals.

NatWest offers a lower two-year fixed rate at 4.64% but this is for an online-only mortgage, where customers must apply and manage the account solely online.

HSBC is also offering a five-year fixed rate for home purchase (at 60% LTV) from 4.24%, which is within touching distance of the best purchase rates in the market. The lowest five-year purchase fixed rate is on offer from Barclays at 4.17% with an £899 fee (60% LTV).

HSBC has also tweaked down its product transfer deals, for existing borrowers looking to switch to a new rate, bringing its five-year fixed rate for existing customers down to 4.24% with a £999 fee. Two year equivalent deals with no fee start from 4.83%.

New data from Barclays shows household spending on mortgage and rental payments increased by just 1.8% in March. This is some way below the peak of 12.2% recorded in June 2023, suggesting increases to housing costs could be stabilising.

But the report also found one in 10 consumers aren’t confident in their ability to meet their monthly mortgage and rental payments, while nearly a fifth are cutting back to keep up with rising housing costs.

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8 April: New Rates To Made Public Tomorrow

HSBC is cutting selected fixed rates across its residential and buy-to-let mortgage ranges for new and existing customers looking for a new deal, effective from tomorrow, writes Jo Thornhill.

Among the reductions are cuts to two, three and five-year fixed rates for residential purchase and remortgage, fixed rate deals on product transfers (deals available to existing customers) as well as buy-to-let purchase and remortgage deals and international holiday home purchase and remortgage.

The new rates and deals, available direct and through brokers, will go live on HSBC’s website tomorrow morning (9 April).

HSBC’s current residential remortgage rates start from 4.71% for a two-year fix and from 4.33% over five years. Both deals are for borrowers with at least 40% equity in their home (60% loan to value) and have a £999 product fee.

The current best-buy for a two-year fixed rate remortgage is 4.68% with NatWest, which also offers the best five-year fix at 4.24%, although this is an online-only deal, where borrowers must apply and manage the account online. Both rates are available up to 60% loan to value and there is a £1,495 fee.

Nick Mendes at broker John Charcol is hopeful the HSBC move will ignite a round of price cuts among lenders: “I expect to see HSBC improve on the minimal cuts we’ve seen from [its] competitors in recent days. NatWest has done well to remain among the best buys for purchase and remortgaging products, for example, but HSBC could topple it when it launches its new rates tomorrow.”

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2 April: Bank Of England Records Increased Approvals

Halifax, the UK’s biggest mortgage lender, has cut selected two and five-year fixed rates for home purchase, remortgage and product transfer by up to 0.11 percentage points, writes Jo Thornhill.

It follows other major lenders, including Santander and HSBC, in tweaking rates downwards for new and existing customers, following more positive news on inflation and interest rates last month (see stories below).

While Halifax reduced rates for purchase yesterday, the rate cut for selected remortgage deals will be effective from tomorrow (3 April).

Two and five-year fixed rate deals for product transfer (deals for existing customers looking to switch to a new rate) and deals for further advance (existing customers wanting to borrow more) will also be cut by up to 0.11 percentage points from tomorrow.

The lender’s two-year fixed rate for home purchase is now at 4.63% with a £999 fee, for borrowers with at least 40% deposit (60% loan to value). The equivalent five-year rate starts from 4.39% (also 60% LTV).

BM Solutions, the specialist lender which is also part of the Halifax Bank of Scotland group, has also reduced selected fixed rates across its product transfer and further advance ranges. The new rates and deals will be available from tomorrow (3 April).

The Bank of England’s latest Money and Credit Report is showing green shoots for the housing and mortgage market with net mortgage approvals for house purchase up by more than 4,000 to a total of 60,400 in February (this is up from 56,100 in January).

Net approvals for remortgage (borrowers switching to a new deal with a different lender) also increased, from 30,900 to 37,700 during the same period.

The ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages fell by 0.29 percentage points, according to the Bank, to 4.90% in February.

Gareth Lewis, managing director at property lender MT Finance, said: “These are positive, encouraging figures from the Bank of England. More people are looking to borrow, and it’s a good sign when house purchase numbers are moving in the right direction. Buyers are comfortable that the interest rate environment is settled.

“With remortgaging to another lender increasing, it is a further sign that the interest rate environment is moving in the right direction as more borrowers are looking at their options, rather than taking the easier route of a product transfer (with the same lender).”

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28 March: Market Looks Forward To June Cut In Bank Rate

Santander has unveiled its latest fixed-rate deals for new customers following the announcement of its 0.21 percentage point rate cut yesterday (see story below). The new deals include a competitive five-year remortgage offer with a fixed rate at 4.34%.

This deal, available through brokers, is on offer for borrowers with at least 40% equity in their property. There is a £999 arrangement fee.

It sits just above the current market best-buy (on deals at 60% loan to value) from NatWest at 4.24% with a £1,495 fee (or at 4.19% for an online mortgage, which you must apply for and manage online only). HSBC’s equivalent deal is at 4.33% while mutual lender Nationwide building society also has a five-year fixed rate for remortgage at 4.34%.

Barclays, which cut selected fixed rates by up to 0.25 percentage points earlier this week, is sitting among the best-buys with its two-year remortgage fixed rate at 4.64% (60% LTV) with a £999 fee.

In contrast, over three years, Santander is now offering rates for remortgage from 4.6% and its two-year rates start from 4.7%. These rates are at 60% loan to value and have a £999 fee.

Santander’s five-year fixed rate for home purchase (60% LTV) is at 4.24% with a £999 fee. Two-year equivalent deals start from 4.65%.

Nick Mendes at broker John Charcol believes competition among lenders could heat up again after the bank holiday weekend. Last week’s Bank Rate freeze at 5.25% by the Bank of England has given lenders confidence that the next interest rate movement will be down, perhaps in June.

Swap rates, the rates at which banks lend to each other and which influence fixed mortgage rates, have fluctuated in recent days, creating a mixed picture with some lenders cutting fixed rates and others pushing costs up.

Mr Mendes said: “There is certainly room for more lenders to follow Santander in cutting rates and I expect we will see five-year fixed rates edge closer to 4% again with each passing week.”

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27 March: First-Timer Loans Available With £5,000 Deposit

Yorkshire Building Society is launching a deal for first-time buyers that enables them to get on the housing ladder with just a £5,000 deposit, writes Jo Thornhill.

The five-year fixed rate loan, available to first-time buyers, has a 5.99% interest rate with no product fee.

Yorkshire will accept applications from borrowers in England, Scotland and Wales who have a £5,000 cash deposit and are looking to purchase a house worth up to a maximum of £500,000. It means borrowers can potentially borrow up to 99% of a property’s value.

The deal is not available for the purchase of flats or new-build properties, and the society has said loans are subject to rigorous credit scoring and affordability checks.

For someone buying a typical first-time buyer property at £200,000, a £5,000 deposit would equate to 2.5% of the purchase price, with the remaining 97.5% being borrowed.

The deal is available direct to customers and via brokers through Accord Mortgages, the lender’s intermediary-only arm.

Ben Merritt, Yorkshire’s director of mortgages, said requiring a £5,000 deposit could shorten the time needed for first-time buyers to get mortgage-ready and “encourage a level playing field for those who don’t have financial support from their families to fall back on”.

David Hollingworth, at broker L&C Mortgages, said: “It’s nice to see a bit of innovation and, although it won’t work for everyone, it brings another alternative for hard-pressed first time buyers.

“It won’t work for those that can’t afford the mortgage, but will be perfect for those that can afford to take on a mortgage but are hampered by the need to save a bigger deposit. It could therefore accelerate the ability to buy, giving security of tenure and avoiding the frustration of house prices potentially moving further out of reach while people are saving.

“Borrowing at a high loan to value naturally will bring a risk that prices could drop back but the five-year fixed rate deal should help to see the mortgage reduced over time and defend against that.”

While there is some limited choice of deals for borrowers with a 5% cash deposit along with schemes for first-time buyers such as shared equity and shared ownership loans, guarantor mortgages and the deposit unlock scheme (for borrowers purchasing a new-build home with a 5% deposit), deals for borrowers with no deposit are rare.

Skipton building society launched its Track Record mortgage to help first-time buyers last year. The 100% mortgage is available for first-time buyers who don’t have a cash deposit saved but who have been renting and can demonstrate a 12-month track record of rental payments.

The deal does not require a guarantor, is fee-free and has a five-year fixed rate at 5.45%. The amount first-time buyers can borrow is capped as monthly mortgage payments can’t be more than the average monthly rent.

Based on a typical monthly rent of £1,290 (with an applicant borrowing at 100% loan to value with an interest rate of 5.45% over a 35-year mortgage term), Skipton could potentially lend up to about £241,000 for home purchase.

Santander has cut a range of its residential and buy-to-let fixed rate deals by up to 0.21 percentage points, effective from tomorrow (28 March). Santander has consistently offered competitive rates for home purchase and remortgage in recent months, and this latest rate cut could see them back at the top of the best buys. It is currently offering a five-year fixed rate for remortgage at 4.45% at 60% LTV with a £999 fee.

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26 March: Market Continues To Respond To Bank Rate Hold

HSBC is changing selected fixed rate deals for new borrowers and existing customers from tomorrow (27 March). Its deals at higher loan-to-value ratios will be reduced, while rates on lower LTV deals are set to rise.

It comes as other lenders, including Barclays, The Mortgage Works (part of Nationwide building society) and Bank of Ireland have cut selected rates.

HSBC has said it will shave selected rates on two, three and five-year fixed rates for home purchase at 90% to 95% LTV. Deals at 85% LTV and lower LTV ratios will increase. The bank’s two and three-year fee saver fixed rates for purchase will also rise at 90% LTV. Selected remortgage fixed rates, from 60% LTV up to 90% LTV, will increase.

Deals for existing customers coming to the end of a deal and looking for a new fixed rate are set to rise for higher LTV deals, and fall for deals at higher 90% and 95% LTV. Selected buy-to-let (BTL) rates for existing customers will go up, while deals for new BTL borrowers – for purchase and remortgage – will decrease.

The bank will unveil its new rates and deals, available direct and through brokers, tomorrow morning.

Some brokers have expressed surprise at HSBC’s rate ries, given the growing market sentiment that the Bank of England could cut interest rates this summer.

Nick Mendes, at broker John Charcol, said: “It is an interesting move from HSBC, which clearly feels it isn’t a prudent move to reduce mortgage rates right now for its keenest priced deals [at lower LTVs]. It may also be a decision to control its current pipeline of applications.”

Barclays is cutting rates on selected residential purchase and remortgage deals by up to 0.25 percentage points from tomorrow (27 March). Among the changes the bank is reducing its two-year fixed rate remortgage deal at 75% LTV with a £999 fee from 4.9% to 4.7%.

The Mortgage Works, the BTL lending arm of Nationwide, has slashed selected fixed rates by up to 0.4 percentage points. The mutual is offering a five-year fixed rate for purchase and remortgage at 3.99% with a 3% fee (at 55% LTV), and a two-year fixed rate (also purchase and remortgage) for limited company borrowers at 4.99% with a 3% fee (75% LTV).

Bank of Ireland has said it will improve selected BTL rates from tomorrow (27 March). Its two-year fixed rates for BTL remortgage at 60% LTV will start from 4.79% with a £995 fee and equivalent five-year rates will start from 4.59%.

Aldermore, has revamped its BTL range and launched two five-year fixed rate products for remortgage, while cutting rates on other selected deals by 0.1 percentage points. It is offering a five-year fee-free remortgage deal at 5.89% (65% LTV) and a five-year fixed rate at 4.89% with a 5% fee (also 65% LTV).

Accord, part of Yorkshire building society group, is bucking the trend for lowering rates by increasing its two and three-year fixed rates on BTL product transfer deals (deals for existing borrowers looking for a new rate). Selected deals will be nudged up by 0.05 percentage points from Thursday (28 March). Five-year BTL product transfer rates are unchanged.

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21 March: Bank Rate Hold May Prompt Lenders To Trim Charges

Mortgage interest rate cuts by the summer are looking increasingly likely, according to brokers and lenders, which would come as welcome relief to beleaguered borrowers.

The Bank of England held the Bank Rate at 5.25% today, in a widely expected move. But the vote among the Monetary Policy Committee (which decides on the rate) was split, with 8 out of 9 committee members voting to maintain the Bank Rate, and one member voting for a cut of 0.25 percentage points to 5%.

Nick Mendes at broker John Charcol says that, while a reduction to the Bank Rate may not be on the cards until at least June, the direction of travel for rates now looks more certain: “Markets have reacted positively following this week’s lower inflation figure, and NatWest was quick to cut its five-year fixed rate deals (see story below).

“I expect similar moves by other lenders over the next fortnight as confidence slowly filters back into the market. There is no reason why we shouldn’t see the best five-year fixed rates back at sub 4%, based on current pricing, in the not-too-distant future.”

Mark Harris, chief executive of broker SPF Private Clients, is also optimistic: “With inflation dipping to 3.4%, it is time for the rate-setters to be bold. The evidence suggests we are edging closer to a rate cut. This would increase borrower confidence and give the housing market a welcome boost.

“We expect the Bank of England Bank Rate to be close to 4% by the end of the year, assuming inflation continues to move towards its 2% target. This would come as welcome news for borrowers struggling with affordability.

“But as far as mortgage pricing is concerned, what the Bank of England does with base rate is only part of the picture. If swap rates, which underpin the pricing of fixed-rate mortgages, edge further downwards, then lenders will introduce cheaper mortgage rates, increasing the choice for borrowers at more palatable pricing. Lenders are certainly keen to lend and want to do more business after a disappointing 2023.”

Matt Smith, mortgage expert at property portal Rightmove, said: “Although today wasn’t the day for the first Bank Rate cut, each day that passes is one step closer, and it’s very much a ‘when’ rather than ‘if’ we see the first drop from 5.25%.

“Mortgage rates have risen slightly over the last six weeks but it does feel like the pressure on lenders to increase rates has dissipated, with some lenders having already cut rates in response to yesterday’s positive inflation news. This may mean that average mortgage rates start to fall back in the next couple of weeks. If this is the case it will be the first time average rates will have reduced in over a month.

“Home-movers shouldn’t expect to see a rush of rate cuts, but the two announcements this week should hopefully continue to give movers more confidence than they perhaps had at the start of 2023.”

Despite the Bank of England’s interest rate hold, Virgin Money has announced rate increases to selected fixed rate deals for home purchase and remortgage, available through brokers, at higher loan to value ratios.

The lender, which is the subject of a £2.9 billion acquisition bid by Nationwide building society, will nudge up selected fixed rates for new customers by up to 0.05 percentage points from 8pm today (21 March).

The bank is offering a five-year fixed rate purchase exclusive deal at 90% LTV at 4.67% (increased from 4.65%) with a £1,295 fee, for example, and a fee-free five-year fix and switch deal for remortgage at 4.89% at 70% LTV (up from 4.85%). With the fix and switch product, Virgin customers can switch to a different deal with the bank after two years without penalty if they wish.

Virgin Money is also increasing selected product transfer fixed rate deals, for existing customers looking for a new deal, by up to 0.05 percentage points. Five-year fixed rates will now start from 4.38%.

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20 March: Bank Of England Rate Call Tomorrow

NatWest is reducing selected five-year fixed rates for purchase and remortgage from tomorrow (21 March).

The bank’s rate cut follows the news that inflation fell from 4% to 3.4% in February, according to official figures. Mortgage brokers are now hopeful falling inflation could lead to an interest rate cut sooner than had previously been predicted, which is likely to lead to cheaper mortgage deals.

The next Bank of England interest rate decision will be at noon tomorrow, although no change to rates is expected at this point.

NatWest’s five-year fixed rate for home purchase has been cut by 0.05 percentage points to 4.19% with a £1,495 fee. This is for borrowers with at least a 40% cash deposit (60% LTV). The equivalent deal at 80% LTV will now start from 4.47%.

The lender has also cut five-year fixed rates for shared equity purchase deals, Help to Buy shared equity remortgage deals and across its purchase and remortgage green mortgages.

Five-year remortgage rates have been cut by up to 0.24 percentage points, with deals starting at 4.28% (60% LTV) with a £1,495 fee. The equivalent deal at 80% LTV starts from 4.94%.

But NatWest has nudged up the cost of selected two-year tracker rate mortgages by up to 0.4 percentage points. The two-year deal for borrowers with 40% equity or deposit will start from 5.79% with a £995 fee (the tracker rate has risen from 0.14 percentage points above the Bank of England Bank Rate to 0.54 percentage points above).

Nick Mendes at broker John Charcol said: “While today’s inflation data was better than the market expectation… markets are still pricing in the first [Bank Rate] reduction for between June and August.

“Mortgage rates have settled, albeit temporarily, but we’re still seeing lenders must make marginal increases to reflect the subdued movement in the financial markets. Overall, lenders will be taking stock to balance their service levels and new business, with the prospect now that activity will be picking up in June.

“The financial markets will be paying close attention to the Bank of England governor’s notes tomorrow, and any split in voting on interest rates to see if this may point to future rate movements.”

Precise Mortgages has withdrawn five-year fixed-rate buy-to-let products at 70% and 75% loan to value, effective at 5pm today (20 March). Five-year deals at 70% LTV currently start from 4.39% with a 7% fee (or from 4.79% with a 5% fee at 75% LTV).

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19 March: No Bank Rate Cut Expected On Thursday

TSB is increasing selected fixed-rate deals from tomorrow (20 March) by up to 0.25 percentage points for new and existing customers.

Among the changes, the lender’s two and five-year fixed rates for remortgage at between 75% loan to value and 95% loan to value will be increased.

It will offer two-year fixed rates at 5.44% and five-year rates at 4.99% (75% LTV), both with a £995 fee.

The cost of selected fixed rate deals for home purchase are pushed up with two-year rates starting from 5.09% (80% LTV) with a £995 fee. Five-year fixed rates at 90% LTV will start from 5.34% with no fee.

Two, three and five-year fixed rates on product transfer deals are also set to rise by up to 0.2 percentage points. These are deals for existing TSB customers coming to the end of a deal and looking for a new fixed rate.

Nationwide building society has pushed up the cost of selected fixed rates for current customers looking for a new deal, including those coming to the end of an existing fixed-rate deal and those looking to borrow more, by up to 0.2 percentage points.

The new two-year fixed-rate product switcher deals now start from 4.69% (60% loan to value) with a £999 fee. The five-year equivalent fixed rates start from 4.24%.

Equivalent deals for existing Nationwide customers looking for additional borrowing start from 4.69% with a £999 fee (60% LTV) over two years, and at 4.29% over five years.

The Bank of England will announce its latest Bank Rate decision this Thursday, with commentators suggesting that it is almost certain to hold the rate at 5.25% – especially if the Federal Reserve holds US rates when it meets on Wednesday.

Figures from the regulator the Financial Conduct Authority show that around 1.5 million homeowners will come to the end of fixed-rate mortgage deals during 2024, with many currently paying less than 3%.

With other lenders including Nationwide increasing their product transfer rates to somewhere in the region of 5% (see stories below), there is likely to be widespread pressure on household budgets from higher mortgage costs.

The Bank of England has estimated around five million homeowners will see their monthly mortgage payments rise between now and 2026.

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13 March: Bank Of England Sees Rise In Arrears

Halifax is increasing the cost of selected two-year fixed rates for remortgage by up to 0.17 percentage points from Friday (15 March). It follows increases to the bank’s fixed rates for home purchase, which were announced on Monday this week.

The rate hike will affect two-year fixed rates for remortgage, including for larger loans (£2 million to £5 million), as well as shared ownership and shared equity deals, and green mortgage loans.

The new rates will be released on Friday. Halifax’s current two-year fixed rate for remortgage is among the best buys, starting at 4.6% with a £999 fee (60% LTV), so even after Friday’s rate increase, brokers say Halifax should still be competitive in this sector.

Halifax will raise two-year fixed rates on selected product transfer deals for existing customers by 0.32 percentage points.

The lender has also announced it is cutting its maximum working age on some mortgage applications from 75 to 70.

The change will apply to some remortgage applications where the borrower is either releasing equity or borrowing more on their mortgage, as well as for some purchase and remortgage applications based on the applicant’s credit score.

Halifax has said that for all other applications, a maximum working age of up to 75 can be used.

Coventry building society is reducing selected fixed rates for residential and buy-to-let purchase and remortgage from tomorrow (14 March). Although the mutual lender’s rate cut bucks the trend among other lenders who are increasing rates (see stories below), brokers say Coventry’s rates are not currently among the best-buy deals.

Concern is growing in the mortgage market following the latest mortgage data released by the Bank of England which shows that home loan arrears rose by 9.2% in the last three months of 2023 compared to the third quarter of the year (July to September).

Rising interest rates over the past two years combined with the cost of living crisis appear to be pushing more homeowners into difficulties.

The value of outstanding mortgage balances with arrears rose to £20.3 billion in quarter four of 2023. This is 50.3% higher than the same period in 2022.

The proportion of total loan balances with arrears, relative to all outstanding mortgage balances, also increased from 1.12% in quarter three of 2023 to 1.23% in Q4 of 2023. This figure now stands at its highest level since 2016.

Alice Haine at investment specialist Bestinvest said: “Households struggling to keep up with mortgage repayments are likely to have other debts to consider, putting them at risk of a severe personal finance crisis.

“Chancellor Jeremy Hunt may have delivered another two pence cut to national insurance contributions in his Spring Budget but that may be too little too late for the many already squeezed by high living costs.”

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11 March: Bank Rate Announcement Next Week

Halifax is increasing its two and five-year fixed rates for residential homebuyers by up to 0.2 percentage points from Wednesday (12 March), writes Jo Thornhill.

The increase will affect deals for first time buyers and home movers, new build and affordable housing deals, large mortgage loans (£2 million to £5 million), shared equity and shared ownership mortgages, and green home loans.

Halifax has offered competitive rates in recent months. Its current residential home purchase rates start from 4.28% (five years) and 4.6% (two years) with a £999 fee (at 60% LTV). The bank will publish its new rates on Wednesday.

Santander is increasing the cost of borrowing for new and existing customers by up to 0.43 percentage points from tomorrow.

The Spanish-owned bank increased rates by up to 0.34 percentage points last month as it joined the majority of mainstream lenders in pushing up rates since the start of the year.

This trend followed the emergence of a widespread belief that the Bank of England will hold its key Bank Rate of interest higher for a longer period than expected in the continued battle against inflation.

The next Bank of England announcement on the level of the Bank Rate is due on 21 March.

Santander’s latest rates won’t be unveiled until tomorrow, but the cost of a broad range of residential deals for purchase and remortgage are expected to be nudged up, along with selected tracker rate deals and rates on buy-to-let (BTL) borrowing.

A number of residential remortgage deals will be reduced in cost at the same time, according to the bank, by up to 0.23 percentage points.

Santander is also increasing rates on its product transfer range by up to 0.34 percentage points. These are deals for existing customers who are looking for a new rate.

Co-operative Bank for Intermediaries is also increasing two and five-year fixed rates with a £1,999 fee, for purchase and remortgage, by up to 0.22 percentage points from tomorrow. Two-year rates will now start from 4.74%, while five-year rates will start from 4.46% (60% LTV).

But the lender, previously known as Platform, is also reducing three-year fixed rates with a £999 fee by 0.06 percentage points to 4.6%.

The lender’s two and five-year BTL fixed rates will rise by 0.19 percentage points, but selected residential professional mortgage rates and two-year fixed rates under the Help to Buy Wales scheme will be cut.

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7 March: Existing Customer Product Transfers To Cost More

TSB is making changes to fixed mortgage rates across its range, effective from tomorrow, including cutting selected rates while increasing the costs of other deals, writes Jo Thornhill.

Among the rate reductions, the lender is cutting three and five-year fixed residential purchase rates by 0.05 percentage points at higher loan-to-value ratios (90% to 95% on three year deals and 80% to 95% LTV on five-year fixed rates).

New three-year purchase rates will start from 5.34% (up to 95% LTV), while five-year rates will start from 4.59% (up to 85% LTV) with a £995 fee.

But selected fixed rates on product transfer deals, for existing TSB borrowers, will rise by 0.1 percentage points, while two-year fixed rates for buy-to-let remortgage are also set to go up by 0.2 percentage points.

Two, three and five-year fixed-rate residential product transfer deals at 60% LTV up to 75% LTV are affected. Two-year deals with a £995 fee will now start from 4.64%, while equivalent five-year rates will rise to 4.39%.

Saffron building society has cut rates on buy-to-let deals, mortgages for the self-employed and for first-time homebuyers by up to 0.8 percentage points. It is offering a five-year fixed rate for residential first-time buyers with a 10% cash deposit at 5.27%. There is no fee on the deal.

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5 March: Markets Expect Bank Rate To Stay Higher For Longer

HSBC is the latest lender to announce increases to the cost of its fixed rate mortgages, following Barclays, NatWest, Virgin Money, Clydesdale Bank and Principality building society, who have all hiked borrowing costs this week.

It is HSBC’s second rate increase in less than two weeks. The rate changes, which will be announced tomorrow (6 March), will see a rise in rates across the majority of loan-to-value ratios for residential and buy-to-let products for both new and existing customers.

Several other major lenders are increasing their borrowing rates, with a consensus emerging that the Bank of England will keep interest rates higher for longer in the face of stubbornly high inflation.

Lenders are responding to the rise in ‘swap’ rates, the rates at which the banks lend to each other and which influence fixed-rate borrowing costs for consumers.

Nick Mendes at broker John Charcol said: “Swap rates continue to see small uplifts in the run up to tomorrow’s Budget. This has also coincided in a noticeable dip in sentiment and confidence in the market in recent weeks.”

Barclays, NatWest, Virgin Money, Clydesdale Bank (part of Virgin Money) and Principality building society have nudged selected residential fixed rates higher, following a swathe of lenders doing the same in recent weeks.

Barclays has increased rates for new and existing borrowers looking for a new deal. But it has also reduced two tracker products for buy-to-let borrowers.

The bank has increased its two-year fixed rate for home purchase (for borrowers with a 40% deposit) to 4.54% from 4.39%. There is an £899 fee. The fee-free equivalent deal rises to 4.68% from 4.58%.

At higher loan-to-value ratios, Barclays’ fee-free two-year fixed rate at 90% LTV has been increased from 5.43% to 5.66%.

Its two-year BTL tracker deal has been cut from 6.48% to 6.2% (60% LTV). There is a £1.295 fee. The same deal at 75% LTV is cut to 6.25% from 6.5%.

Virgin Money is nudging up the cost of a range of its fixed rate deals by up to 0.18 percentage points, while reducing selected two and five-year residential remortgage rates. The rate changes are effective from tomorrow (6 March).

The lender’s five-year remortgage Fix and Switch fixed rate at 70% LTV, through brokers, will be increased by 0.06 percentage points to 4.85%. There is a £1,495 fee. The fee-free equivalent deal will be increased by 0.07 percentage points to 5.16%.

Two and five-year fixed rate deals for mortgages of £1 million or more will increase by 0.23 percentage points (at 75% LTV), with rates starting from 4.79% with a £1,995 fee.

NatWest has increased selected two and five-year fixed rates for existing customers looking for a new deal by 0.1 percentage point.

Among its new rates on product transfer deals is a five-year fixed rate at 4.34% (60% LTV) with a £995. This rate has gone up from 4.24%. The two-year equivalent deal now starts from 4.69% (up from 4.59%).

Clydesdale Bank, has increased rates across its range for new and existing borrowers by up to 0.29 percentage points on residential deals and by up to 0.45 percentage points on BTL products.

In addition, Clydesdale’s specialist mortgage deals aimed at newly-qualified professionals (such as doctors and solicitors) will rise by 0.65 percentage points.

Principality building society is increasing selected fixed rates across its range by up to 0.34 percentage points, effective from tomorrow (6 March). Residential remortgage rates at 90% and 95% LTV are affected, as are a number of buy-to-let deals for new borrowers. The new rates will be unveiled tomorrow.

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29 February: Borrowers Seemingly Undeterred By High Rates

Approvals for home purchase mortgages rose for the fourth consecutive month in January, taking them to their highest level in more than a year, according to the latest figures from the Bank of England, writes Jo Thornhill.

Today’s Credit and Money Report shows the number of approvals rose to 55,227 in January, up from 51,506 in December 2023. The figures were last at this level in October 2022, when they surpassed 58,000.

Net approvals for remortgage – which relates to remortgaging with a different lender, not transfers with an existing lender – remained stable at 30,885 in January (the December figure was 30,917). But the number is higher than the 25,819 recorded in January 2023.

The ‘effective’ interest rate – the average interest paid by borrowers – on newly drawn mortgages fell by 0.9 percentage points to 5.19% in January, according to the Bank’s data. This is down from a high of 5.34% in November last year, which was the highest since the Bank started recording average mortgage rates in 2016.

Mark Harris of broker SPF Private Clients said: “Approvals rose again in January as lower mortgage rates boosted affordability and confidence. The average interest rate paid on newly-drawn mortgages fell in January, but towards the end of the month lenders were raising their fixes again.”

Alice Haine at investment specialist Bestinvest agrees buyer appetite appears to be growing: “Confidence is slowly returning to the housing market with prices remaining resilient. The prospect that Jeremy Hunt will unveil a 99% mortgage scheme in his Budget next week may offer a further boost to the sector, helping first-time buyers with a deposit of just 1% get a foot on the property ladder.

“However, new buyers should carefully evaluate any mortgage they take on to ensure they can comfortably afford the monthly repayments, particularly at a time when mortgage rates remain so high.”

TSB is increasing the cost of selected residential fixed rate deals from tomorrow (1 March) by up to 0.15 percentage points for new customers and up to 0.25 percentage points for existing customers (on its product transfer deals).

But it is reducing a range of its tracker mortgage deals for new borrowers by up to 1.05 percentage points, as well as cutting its two-year fixed rate buy-to-let remortgage deals by up to 0.5 percentage points.

The rate increases will see the bank’s three-year fixed rate residential remortgage deal rise from 4.54% to 4.69%. The deal has a £995 fee and is available for homeowners with at least 25% equity in their property. Its three-year fixed rate deal for homemovers will rise from 4.44% (at 60% loan to value) to 4.54%, also with a £995 fee.

Rates on residential product transfer deals, including two-, three- and five-year fixed remortgage deals will increase across the board for borrowers with at least 25% equity in their home.

Two-year fixed rates currently start at 4.44% (60% LTV) with a £995 fee and at 4.04% over five-years, but these deals will rise by up to 0.25 percentage points. The new rates and deals will be published tomorrow.

Santander for Intermediaries has launched a new range of three-year fixed rate mortgage deals, through brokers, for borrowers buying new build properties with a 5% cash deposit (95% loan to value). The fee-free deal is at 5.39% and pays £250 cashback on completion. The equivalent deal at 90% LTV starts at 4.97% with a £999 fee or 5.15% with no fee.

All Santander deals for new build purchase can be reserved for up to nine months in advance of completion.

Bank of Ireland is withdrawing selected residential fixed rates, through brokers, from 5pm today (29 February). It is expected that the lender will increase rates in the coming days.

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28 February: Mutual To Raise Fixed Rate Costs From Tomorrow

Nationwide building society is hiking the cost of its fixed rate mortgages by up to 0.2 percentage points for new borrowers and existing customers, writes Jo Thornhill.

The higher rates, effective from tomorrow (29 February) will see two, three and five-year fixed rates for remortgage nudged up by up to 0.15 percentage points. Costs of five-year deals at 60% loan to value will start from 4.29% with a £999 fee, while two-year deals will start from 4.69%.

Rates for home purchase, including for first-time buyers, are set to rise by up to 0.2 percentage points. Five-year purchase fixed rates will start from 4.19% with a £999 fee for borrowers with at least 40% cash deposit. Equivalent three-year rates start from 4.54% and two-year deals from 4.64%. The higher rates apply to customers applying through a broker or directly to the lender.

Nationwide has also introduced a range of remortgage deals for new customers with only 5% equity in their property – equivalent to a 95% Loan to Value. Although the lender already offers these deals for first-time buyers and home purchasers, it is the first time it has offered remortgage deals at 95% to remortgagers since 2008.

Its two-year fixed rate at 95% LTV is priced at 5.84% with a £999 fee, or there’s a 6.14% equivalent with no arrangement fee. Over three-years the same deal is priced at 5.7% (or 5.88% with no fee) or 5.34% over five years (5.49% with no fee).

Nationwide is also increasing selected fixed rates on its product transfer deals and rates for additional borrowing, for existing customers. The hikes affect borrowers with at least 25% equity in their property.

Five-year switcher rates, for borrowers looking for a new deal with Nationwide, will start from 4.19% with a £999 fee. Two-year deals will start from 4.59%.

Halifax for Intermediaries, which offers mortgage deals through brokers, is making changes to a wide range of its fixed rate deals for new and existing customers from Friday (1 March).

While the bank has said it will lift two and five-year rates for home buyers, including first-time buyers, by up to 0.18 percentage points, as well as increasing selected two-year remortgage rates by up to 0.29 percentage points, it will also reduce its two and five-year fixed remortgage rates for borrowers with at least 10% equity in their property (at 90% loan to value).

Product transfer fixed rate deals, for existing customers looking for a new deal with the bank, will be increased by up to 0.29 percentage points.

Halifax’s current two-year remortgage fixed rates for new borrowers start from 4.52% with a £999 fee, with five-year rates starting at 4.44%. The new rates and deals will be published on Friday.

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27 February: Markets Toes ‘Higher-For-Longer’ Line

Virgin Money is increasing the cost of selected fixed-rate mortgages by up to 0.1 percentage points for new borrowers and up to 0.2 percentage points on deals for existing customers looking to switch, writes Jo Thornhill.

The hikes, effective from 8pm this evening, will see the lender’s cheapest five-year fixed rate for remortgage (through brokers at 60% loan to value) rise to 4.44%, an increase of 0.05 percentage points. There is a £995 fee.

This is the lender’s third round of mortgage rate increases this month. Most lenders have adjusted rates upwards in recent weeks in response to inflation data in the UK and in the United States which shows prices are not falling as quickly as had been hoped.

This is being seen as a reason for the Bank of England to hold interest rates higher for longer.

Virgin’s fixed rates for home purchase will also rise. The lender is offering a five-year fixed purchase rate at 4.69% (85% LTV) with no fee.

Two, three and five-year fixed rate product transfer deals (available to existing Virgin Money customers looking for a new deal) are also set to rise across the board.

Five-year fixed rates for customers with at least 40% equity in their property will now start from 4.3% with a £1,495 fee. For those with 20% equity (80% LTV), five-year fixed rates now start from 4.94% (or 5.34% over two years) with a £995 fee.

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23 February: Virgin Money And Halifax First To Sign Up To ‘Rate Reducer’ Mortgage

Virgin Money and Halifax have signed up to offer a new type of mortgage deal for buyers of new-build homes, with possible rates on offer at below 1%, writes Jo Thornhill.

The specialist mortgage deal, called Rate Reducer, will launch from Monday next week (26 February).

Offered by Own New, a company set up in 2022 to make home purchase more accessible, Rate Reducer works by ‘rerouting’ housebuilder cashback incentives from the buyer to the mortgage lender.

The cashback – which can total up to 5% of the home purchase price – will then be used to offset against mortgage interest instead, with the effect of reducing the buyer’s monthly mortgage repayments.

For example, a buyer putting down a 10% deposit on a new home worth £350,000 with a 5% cashback offer would see their fixed rate reduce from 4.79% to 3.78% over two years.

However, only homebuyers with the chunkiest deposits could see their rate reduced to 0.99%.

Own New’s Rate Reducer scheme is available to all buyers, not just first-timers, and borrowers can choose between two or five-year fixed rate deals.

It’s currently only available through Barratt Developments but a further 60 housebuilders are set to join from next week, according to Own New.

Lenders that have pledged to follow Virgin Money and Halifax and join the scheme include Gen H, Furness building society and Perenna.

David Hollingworth at broker London & Country Mortgages, said: “Rate Reducer will help target one of the key barriers for many buyers, giving more breathing space in monthly payments.”

He added: “Borrowers will have to meet lender affordability tests as normal but it will also be important for them to plan ahead. Once the deal ends there is every chance that the rate environment will still be higher and so payments will climb.

“We’ve seen other schemes that can help buyers with small deposits but this new, innovative approach puts another option on the table for buyers.”

Own New already offers Deposit Drop – a scheme which, in partnership with Darlington building society, helps homebuyers in Yorkshire and the North East get access to 95% mortgage deals.

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22 February: Raft Of Major Lenders Adjust Mortgage Costs

HSBC has raised the cost of fixed rate mortgage deals across its range – including its market leading 3.99% five-year fixed rate for remortgage – in a blow to prospective borrowers, writes Jo Thornhill.

The move, which brokers described as ‘inevitable’ follows Santander, which pulled the plug on its sub-4% remortgage deal on Tuesday (see story below). It comes amid a flurry of price adjustments from rival lenders, also announced today.

The cost of borrowing for banks in the wholesale markets has been gradually creeping upwards over recent weeks, fuelled by more negative economic news and stubbornly high inflation data. This has increased the likelihood that interest rates, and consequently mortgage rates, will stay higher for longer.

HSBC is increasing residential fixed rates for new and existing borrowers, both direct and through brokers, including first-time buyer rates, deals for homemovers, remortgage, product transfer and buy-to-let from tomorrow (Friday 23 February).

Its current deals, which include a 5-year 3.99% fix (the only sub-4% deal remaining on the market) will be pulled at close of business tonight (22 February).

NatWest is increasing selected fixed rates for new and existing borrowers from tomorrow. Two and five-year fixed rates for purchase and remortgage will rise by up to 0.15 percentage points, while green and shared ownership mortgages will increase by 0.1 percentage points.

Costs for the lender’s two-year fixed rate for remortgage now start from 4.69% with a £1,495 fee (60% LTV), up from 4.59%. The equivalent five-year deal has gone up by the same amount to a new rate of 4.3%.

Virgin Money is nudging up selected fixed rates for new and existing customers by up to 0.1 percentage point from 8pm tonight. Broker exclusive residential remortgage deals at 60% LTV and 70% LTV as well as some buy-to-let mortgage costs will rise by the full 0.1 percentage point.

TSB has increased the cost of its fixed rate residential mortgage rates, direct and through brokers, by up to 0.3 percentage points from today. It’s the lender’s second rate rise this month, after it pushed up rates on 9 February (see stories below).

The bank is offering two-year fixed rates for remortgage from 4.84%, three-year fixed rates from 4.44% and five-year rates from 4.49%. All deals come with a £995 fee and are available for homeowners with at least 40% equity in their property. For remortgage deals, the increases will apply on lending up to 75% loan to value.

For first-time buyers, TSB is offering a two-year fixed rate at 4.99% (for buyers with at least 15% deposit), or a five-year fix at 4.64% (also 85% LTV). Both deals have a £995 fee. A two-year fixed rate fee-free deal for first-time buyers is now priced at 5.39%, or 5.84% over five years.

Nick Mendes, mortgage broker at John Charcol, commented: “Sub-4% deals will be off the cards temporarily, but once more positive inflation data feeds back into the market we expect pricing will slowly edge back down.”

However, Halifax for Intermediaries is bucking the trend by reducing selected mortgage deals, also from tomorrow morning. Fixed rate deals will be reduced on the bank’s remortgage range for new customers, as well as on purchase deals (including for first-time buyers), deals for larger loans (£2 million or more), new build loans, green mortgages, and affordable housing deals. All new rates and deals will be unveiled tomorrow.

The Government is expected to launch a new scheme for first-time buyers in next month’s Spring Budget. It will encourage lenders to offer 99% LTV mortgages, which will enable buyers to get onto the property ladder with just a 1% cash deposit.

It is thought the government will offer backing to lenders in the form of a financial guarantee in a similar way to its current 95% mortgage guarantee scheme.

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20 February: Brokers Expect Further Rate Increases

Santander is increasing the cost of its fixed-rate mortgage deals by up to 0.34 percentage points from this evening, which will see an end to its sub-4% five-year fixed rate deal, writes Jo Thornhill.

The bank’s five-year fixed rate deal for residential remortgage will now start from 4.22% with a £999 fee, for borrowers with at least 40% equity in their property. Equivalent two-year rates will start from 4.72%.

The move will leave HSBC as the only mainstream lender still offering five-year residential fixed rates at under 4%. The deal is available through brokers as well as direct from the bank.

HSBC’s five-year fixed rate deal for residential remortgage at 3.99% is available to homeowners with at least 40% equity in their property, and there is a £999 arrangement fee.

Borrowers can get a rate at 3.96% with the bank, but there is a £1,499 fee (also 60% loan to value). But brokers say HSBC’s rates are also likely to be increased.

Nick Mendes at broker John Charcol says: “Initial market expectations had factored in multiple Bank Rate reductions [by the Bank of England] throughout the year, starting as early as March. But recent data, both domestic and international, now suggests such reductions may not materialise until at least June.

“Given the nature of the market, borrowers should act quickly to secure a deal. While we still anticipate a reduction in fixed rates, the timeline for this adjustment may be longer than initially expected. It is important to note that, even if you secure a deal, there is still flexibility to make changes close to completion should a more favourable offer become available.”

Bank of Ireland is increasing selected fixed rates across its product transfer range for existing customers from tomorrow. Among the new deals the lender is offering two-year fixed rates from 4.93% and five-year fixed rates from 4.62%, both with a £1,495 fee and at 60% loan to value.

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12 February: Era Of Falling Rates Looks To Be Over

Nationwide building society is increasing selected fixed and tracker mortgage rates by up to 0.25 percentage points from tomorrow (13 February).

The rate hike will apply across the mutual lender’s mortgage deals for new borrowers and for existing Nationwide customers looking for a new deal (product transfer deals) or moving home and borrowing more (additional borrowing).

Nationwide’s two-year fixed rate for remortgage will rise to 4.54% with a £1,499 fee (60% LTV), while the equivalent five-year deal will rise to 4.14%. The five-year fixed rate has risen from 3.94% previously.

It has also increased rates for home purchase. Deals now start from 4.49% with a £1,499 fee (60% LTV) over two years and from 4.04% over five years at the same LTV.

Nationwide joins a growing number of lenders in its upping mortgage costs. Last week NatWest, TSB, Virgin Money and Halifax all lifted their fixed rates.

Clydesdale Bank has also given notice to brokers that it will increase selected residential fixed rates by up to 0.2 percentage points from 13 February.

Its residential purchase rates for borrowers with at least 35% cash deposit, exclusively available through brokers, will be withdrawn at the end of today (12 February), along with selected deals for professionals and newly qualified professionals.

But the lender, which is part of Virgin Money, will also reduce rates on selected two- and five-year fixed rates at 95% loan to value, and launch new fixed rate deals for borrowers with larger mortgage loans (£1 million to £2 million). All deals are available through brokers.

Despite the general trend for rising mortgage rates over the past week, data compiler Moneyfacts research shows that the average two-year fixed mortgage rate has dropped by 0.37 percentage points over the past month. The average rate now stands at 5.56%.

This is the biggest monthly fall, according to Moneyfacts, since December 2022.

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8 February: Market Adjusts To ‘Higher For Longer’ Scenario

Volatile market conditions are prompting more lenders to increase fixed-rate mortgage deals, writes Jo Thornhill.

Swap rates, the interest rates at which banks lend to each other, have nudged up again as sentiment grows that interest rates will stay higher for longer. Last week the Bank of England held its Bank Rate at 5.25%, giving no indication when it might be cut.

Halifax is increasing the cost of fixed rates across its range, available through brokers, for new and existing customers (product transfer deals) from tomorrow (9 February).

The bank will hike fixed rates on deals for larger sized loans, shared equity and shared ownership deals, as well as green mortgage products. Full details and new rates will be released tomorrow (9 February).

NatWest is increasing selected two and five-year fixed residential purchase and remortgage rates from 9 February by up to 0.11 percentage point. Product transfer deals for existing customers will also be increased by up to 0.15 percentage points.

First-time buyer deals at 90% loan to value will be pushed up by up to 0.11 percentage points. The five-year fixed rate for purchase will be at 4.59% with a £995 fee and the two-year equivalent deal rises to 4.99%.

The bank’s lowest two-year rate for remortgage will be at 4.49% with a £1,495 fee and the equivalent five-year deal is still just below 4% at 3.99%, also with a £1,495 fee.

Virgin Money is increasing a range of fixed rate exclusive deals, available through brokers, from 9 February. Among the changes, the bank’s five-year purchase deal at 90% LTV with a £1,295 fee will be increased by 0.1 percentage point to 4.5% and five-year fixed remortgage deals at 60% LTV and 70% LTV will nudge up by 0.05 percentage points, starting from 4.24%.

The lender is also increasing selected buy-to-let fixed rates and two, three and five-year fixed rate product transfer deals by 0.05 percentage points. Five-year remortgage rates for residential product transfer will start from 3.98% (65% LTV).

Nick Mendes, mortgage broker at John Charcol, says: “Market Swap movement continues to increase each day and it won’t be long before those remaining sub-4% deals are no longer available. The rate war feels like it is cooling off, but hopefully this is only temporary.”

TSB is also increasing its two-year fixed-rate deal for residential remortgage for borrowers with up to 25% equity in their home by 0.2 percentage points to 4.74%, effective from 9 February.

It is also increasing its two- and five-year fixed rates, available through brokers, for first-time buyers and home purchase at 85% loan to value up to 90% LTV by 0.1 percentage point to 5.04% (two-year) and 4.74% (five-year). These deals both have a £995 fee.

The bank has also hiked rates on a range of its two-year fixed product transfer deals for existing customers.

TSB has cut some rates (two and five-year purchase deals and five-year remortgage rates) for buy-to-let borrowers by up to 0.5 percentage points.

Accord, the specialist lending arm of Yorkshire building society, is withdrawing a range of residential mortgage products for new borrowers this evening and will increase the rates from 9 February.

The deals seeing an increase in cost include large loans (up to £2 million) at 80% and 85% loan to value with a £995 fee as well as three-year purchase deals for new build homes at 90% and 95% LTV. Selected deals for purchase and remortgage at 80% LTV are also being increased.

The lender will also increase selected residential product transfer deals by up to 0.1 percentage point (75% to 90% LTV), while also cutting the rate on some larger loan product transfer deals at 85% LTV.

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7 February: Lowest 5-Year Purchase Rate Down To 3.94%

Santander has cut the cost of selected fixed rate deals for home purchase by up to 0.2 percentage points.

Its lowest five-year fixed rate for purchase falls to 3.94% with a £999 fee, down from 4.04%. This is for borrowers with at least 40% cash deposit towards their purchase (60% loan to value).

The equivalent five-year fixed rates for borrowers with a 25% deposit or 10% deposit are now priced at 4.14% (down from 4.24%) and 4.64% (down from 4.84%) respectively.

Two-year fixed rates have also been reduced. Rates in this sector now start at 4.2% (down from 4.25%) also with a £999 fee at 60% LTV. Equivalent deals at 75% LTV and 90% LTV are now at 4.30% and 4.89% respectively.

Aldermore, the buy-to-let lending specialist will withdraw all mortgage deals available through brokers at 6pm on 6 February. Deals will be relaunched on 7 February at higher rates. The lender has said the rate changes will apply to residential owner-occupier, BTL and product transfer deals (rates for existing customers looking to switch).

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5 February: Market Accepts Rates Will Be ‘Higher for Longer’

A number of lenders are increasing the cost of residential fixed-rate deals as consensus grows that interest rates will stay higher for longer following last week’s decision by the Bank of England to hold the Bank rate at 5.25%, writes Jo Thornhill.

HSBC has told brokers it will increase its two and five-year and 10-year fee-free remortgage fixed rates for borrowers with 40% equity or deposit. At the same time it is reducing the cost of a range of its first-time buyer deals (at higher loan to values) and some product transfer fixed rates at higher LTVs (for existing customers).

The bank’s five-year fixed rate for remortgage with a £999 fee has increased from 3.99% to 4.04% (60% LTV) and its 10-year fee-free deal at 75% LTV has risen from 4.39% to 3.79%.

Halifax has announced a cut to a range of its first-time buyer fixed rates at higher loan to value ratios from 6 February.

The bank’s five-year fixed rate for home purchase for borrowers with a 10% cash deposit, is cut from 4.97% to 4.44% with a £999 fee. The fee-free equivalent deal is cut from 5.11% to 5.06%. The fee-free two-year fixed rate is now at 5.1%, while the same deal with a £999 arrangement fee is cut to 4.84%.

But Halifax has also increased selected remortgage deals, including an uplift to rates on larger mortgage loans, shared equity deals and green mortgages by up to 0.12 percentage points. Selected two-year product transfer deals (for existing customers) will also increase by the same amount.

Coventry building society has also given notice of rate withdrawals from 6 February, with new deals, at higher rates, expected from Wednesday. It is increasing two and five-year fixed rates for new borrowers with a 25% deposit or equity or less (75% LTV).

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1 February: Market Adjusts To Bank Rate Stasis

Nationwide building society and Virgin Money have both nudged up the cost of selected fixed-rate deals for residential purchase and remortgage borrowers, writes Jo Thornhill.

It follows a number of lenders raising selected fixed rates over the past week, including Barclays, Coventry building society and Co-operative Bank. This is despite the Bank of England announcing that it is holding the main Bank interest rate at 5.25% today.

Nationwide is increasing rates for new borrowers by up to 0.3 percentage points from 2 February. Its two-year remortgage rate will now start from 4.45% with a £1,499 fee, and the five-year equivalent deal will start from 3.94%. Both are at 60% loan to value.

First-time buyer deals at 90% loan to value are now from 5% for a two-year fixed rate or 4.55% over five-years, both with a £999 fee. Its five-year 95% loan to value fee-free first time buyer deal is at 5.14%.

Virgin Money’s best two and five-year fixed rates for residential remortgage, through brokers, start at 4.64% and 4.19% respectively, both with a £995 fee (60% loan to value). Its two-year remortgage rate at 70% LTV is now 4.69% with a £995 fee.

Five-year purchase rates now start from 4.09% with a £1,295 fee (up to 75% loan to value).

But Virgin has also launched a new fee-free two-year fixed rate for home purchase for borrowers with just a 5% cash deposit. The deal, at 5.49%, offers £500 cashback on completion.

Coventry building society has also released its new residential fixed rates for borrowers with 25% equity in their property, following a rate rise announced yesterday (see stories below). The mutual is now offering a five-year fixed rate for remortgage (75% LTV) at 4.28% with a £999 fee. Two year equivalent rates start from 4.42%.

At the same time the mutual has cut selected residential home purchase rates, product transfers and fixed rates for new and existing BTL borrowers.

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31 January: Market Fears ‘Higher For Longer’ Bank Rate Bind

Lenders including Barclays, Co-operative Bank for Intermediaries and Coventry building society are increasing interest rates on fixed-rate mortgage deals as volatility creeps back into the market.

The Bank of England is expected to keep interest rates on hold at 5.25% when its monetary policy committee (MPC) meets tomorrow, and the general market consensus now is that rates will remain higher for longer in 2024.

This has nudged the rates at which banks lend to each other – known as ‘swap’ rate – higher, which in turn is feeding through to what customers are charged.

Barclays has increased selected fixed rates for existing borrowers looking for a product switch deal by up to 0.3 percentage points. Its two-year fixed rate product switch deal has risen from 4.09% to 4.39% with an £899 fee (60% LTV). The equivalent deal at 75% LTV has risen from 4.3% to 4.6%.

The bank has also increased rates on its green mortgage range and deals under the mortgage guarantee scheme, as well as loyalty rates for premier banking customers.

But at the same time Barclays has cut a range of deals for new customers, including its five-year fixed rate for home purchase, which has been reduced from 4.39% to 4.09% with a £899 fee (60% LTV).

Co-operative Bank for Intermediaries has also increased selected product transfer deals for residential customers (including help to buy remortgage deals), by up to 0.6 percentage points. But product transfer deals for existing buy-to-let borrowers have been cut by up to 0.78 percentage points.

Co-op’s five-year fixed rate product switch deals for residential remortgage now start from 3.94% with a £1,249 fee, while two-year deals start from 4.20%.

Coventry building society is increasing all fixed rates for residential customers remortgaging at 75% loan to value (borrowers with 25% equity in their property) from 1 February. But selected residential home purchase fixed rates, product transfers and fixed rates for new and existing BTL borrowers will be reduced.

In contrast to the mixed rate changes of some lenders, TSB is slashing the cost of deals across its mortgage range by up to 0.85 percentage points from 1 February.

The bank is making cuts of up to 0.55 percentage points to its five-year fixed rate for remortgage as well as reductions of up to 0.4 percentage points on fixed rate first time buyer and shared ownership deals.

Its five-year fixed rates for remortgage now start from 4.19% with a £995 fee (60% LTV).

Halifax is cutting selected fixed rates for remortgage, available through brokers, from 1 February. The rate cuts, of up to 0.56 percentage points, will be on deals for larger mortgage loans (up to £2 million), shared equity and shared ownership deals and green mortgage products. Selected product transfer deals will be cut by up to 0.46 percentage points. The bank is offering a five-year fixed rate for remortgage at 4.19% with a £999 fee (60% LTV).

NatWest has also announced the withdrawal of its two and five-year fixed rates for purchase and remortgage at 90% loan to value from 1 February. A handful of five-year fixed rate buy-to-let deals will also be removed from the market.

Nick Mendes at broker John Charcol says: “While those at the top of best buys have seen margins slim in recent weeks, there is still room for lenders such as TSB to make significant reductions. Some lenders haven’t been as quick to pass on reductions, so I expect there is still more to come from some lenders.

“On the eve of the February MPC meeting, while markets have already priced in a ‘hold’, all eyes will be on the [Bank of England] Governor’s notes following the announcement. Any negative sentiment there is likely to lead markets to delay pricing in any further rate reductions, and that could mean a knock on for mortgage rates.”

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30 January: Report Sees Marginal Growth In Lending

Skipton building society is cutting selected residential and buy-to-let (BTL) fixed rates, through brokers, by up to 0.46 percentage points from 31 January, writes Jo Thornhill.

The biggest cut is on the lender’s five-year fixed rate BTL deal at 75% loan to value, which falls from 4.95% to 4.49%.

The society’s latest residential shared ownership deals include a fee-free two-year fixed rate (90% LTV) at 5.49% and an equivalent five-year fix at 5.19%. These deals are available for purchase and remortgage.

A swathe of product transfer rates for existing Skipton customers are also being reduced. This includes a five-year fixed rate at 60% LTV, which is now at 4.31% with a £999 fee.

The mutual lender’s 100% loan to value Track Record mortgage has not been cut in this latest round of reductions. It has already been cut twice since the New Year and is currently priced at 5.35%.

The Bank of England’s Money and Credit report, published today, shows that overall mortgage lending rose marginally at the end of last year, although net growth is stagnant.

Gross mortgage lending was £17.2 billion in December 2023, up from £16.4 billion in the previous month, but the annual growth rate for net mortgage lending (gross advances minus mortgage debt repaid) was flat for the first time since March 1994.

Net mortgage approvals (approvals net of cancellations) for house purchases, which is an indicator of future borrowing, rose from 49,300 in November to 50,500 in December.

Net approvals for remortgaging (which only capture remortgaging with a different lender) increased from 25,700 in November to 30,800 in December.

Tomer Aboody, director of property lender MT Finance, said: “There are signs that the Bank of England’s monetary policy is having the desired effect, with a softening of consumer spending and confidence, despite the pick-up in mortgage approvals.

“While inflation is increasingly under control and nearing the Bank’s 2% target, it looks as though we are heading into a period of nominal to flat growth, requiring some government stimulus for the economy in early 2024, perhaps in the Budget.”

Principality building society is cutting selected fixed rates for new customers by up to 0.45 percentage points from Thursday (1 February). Two-year fixed rates start from 4.49% and five-year deals start from 4.25%, both 75% LTV with an £895 and £1,395 fee respectively
Newcastle building society has lowered fixed rates for BTL borrowers, through brokers, by up to 0.3 percentage points. It is offering a two-year fix for purchase or remortgage at 5.1% with a £999 fee. Five-year rates start from 4.75%
Suffolk building society has cut rates on its 95% loan to value deal for home purchase or remortgage, by 0.26 percentage points, to 5.89% with a £999 fee
The Mortgage Works, the specialist lending arm of Nationwide building society, has cut rates on selected BTL product transfer deals for existing customers by up to 0.2 percentage points. It is offering a two-year fixed rate at 3.99% (65% LTV) with a £3,995 fee, and a three-year deal at 4.39% with a £1,495 fee.

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26 January: Virgin Anticipates Potential Rate Falls

Virgin Money is offering a five-year fixed rate mortgage for home buyers which offers a penalty-free get-out option after just two years, allowing borrowers to switch on to a lower fixed deal if rates have fallen, writes Jo Thornhill.

The product, known as ‘Fix and Switch’, is available for home purchase. It is fee-free and has a fixed rate of 5.14% for five years. This is for buyers with at least a 15% cash deposit (85% loan to value).

For borrowers with just 10% deposit towards their home purchase (90% loan to value) the rate is 5.27%. Both deals offer £500 cashback to buyers on completion.

The innovative part of the plan is that borrowers are able to switch to another deal (either with Virgin or a new lender) after two years if desired because the five-year fixed rate has no early repayment charges (ERCs) after two years.

Virgin’s Fix and Switch five-year rate is not the cheapest available (Nationwide is offering a five-year fix at 4.14% at 85% LTV, for example), but it does offer flexibility for borrowers wary of committing to a fix of that duration.

The Fix and Switch borrower affordability assessment is made with regard to a five-year term rather than two, which might mean the customer could potentially borrow more.

This is due to the fact that a five-year fixed rate offers longer-term stability for both borrower and lender, compared to a two-year deal, meaning stress tests can be less stringent .

Nick Mendes at broker John Charcol says some customers might be willing to pay a higher rate in return for added flexibility: “Lenders typically compete on price or criteria, but this deal from Virgin Money is a hybrid of both.

“Fixed rates are expected to reduce over the next few years, but nothing is certain. Clients want stability but tend to opt for a two-year fixed rate as no one wants to be tied into a higher rate for longer than necessary.

“Having a five-year fixed rate deal with no early repayment charges after two years is a welcome move and another demonstration of how lenders are actively working to attract new business.”

Lenders including Barclays and HSBC offer flexible tracker rate products that offer the opportunity to switch, without penalty, to a fixed rate at a later date. But Virgin’s Fix and Switch is the only residential five-year fixed rate with a penalty-free get-out clause, albeit with the proviso that the switch must be to a Virgin deal.

Specialist lender Accord, part of Yorkshire building society, offers a five-year fixed rate with no early repayment penalties on a buy-to-let mortgage deal.

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23 January: Major Lenders Jostle For Position

Nationwide building society is slashing selected fixed rate mortgage deals by up to 0.81 percentage points, effective from tomorrow (24 January).

The mutual lender, one of the biggest in the UK, will offer a five-year fixed rate for remortgage at 3.88% (60% loan to value) with a £999 fee, and a five-year deal for home purchase at 3.85% (60% LTV) with a £1,499 fee. It will also offer a five-year switcher rate, for existing customers, at 3.84%.

It comes as other mainstream lenders Santander and Virgin Money have both withdrawn or increased their sub-4% fixed rates.

Virgin Money has reduced selected residential and buy-to-let mortgage rates by up to 0.65 percentage points, including broker-exclusive remortgage rates and deals for larger loans (£1 million plus).

But the lender has increased the rates on some of its most competitive residential home loan deals, including its five-year fixed rates, which had previously been below 4%. Its five-year deals now start from 4.09% for home purchase, or from 4.19% for remortgage.

Santander has also announced it will increase selected fixed rates from tomorrow (24 January). Like Virgin Money, Santander had been offering highly competitive five-year fixed rate deals at below 4%. These market-leading rates are now expected to replaced with higher rates for home purchase and remortgage. New deals will be unveiled tomorrow.

Among Virgin’s new remortgage broker rates it is offering a two-year fixed rate at 4.64% (60% loan to value) with a £995 fee. The bank is also offering two and five-year fixed rates for purchase or remortgage at 75% loan to value starting from 4.37% with a £1,995 fee.

Buy-to-let deals have seen the biggest rate cuts (of up to 0.65 percentage points) in this latest round of reductions by Virgin. Two-year fixed rates with a 1% fee are cut by the full 0.65 percentage points to start from 4.64% (60% LTV). Two-year deals with a 3% fee are cut by 0.45 percentage points to 3.87%.

Five-year BTL rates with a 1% and 3% fee now start from 4.34% and 3.87% respectively.

Barclays is slashing the cost of a wide range of its fixed-rate mortgage products for new and existing residential and buy-to-let borrowers.

The move follows significant rate cuts by most of the biggest mortgage lenders since the start of the year.

Rates for new Barclays customers will be cut by up to 0.5 percentage points, while existing customers will see fixed rate switcher products cut by up to 0.6 percentage points.

The lender will offer a two-year fixed rate for residential remortgage at 4.12% with an £899 fee (75% LTV), a two-year fixed rate for home purchase at 4.09% with an £899 fee (60% LTV), and a five-year fixed rate for remortgage at 4.47% with a £999 fee (60% LTV).

For new buy-to-let customers, Barclays has a two-year fixed rate for purchase at 5.68% with a £1,295 fee (75% LTV) and a five-year fixed rate for remortgage at 4.60% with a £1,795 fee (75% LTV).

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17 January: Santander, Leeds, Metro Bank, TSB Make Cuts

Santander has unveiled a range of lower mortgage rates, following its announcement yesterday that it was making a fresh round of cuts, writes Jo Thornhill.

The Spanish-owned lender is offering a five-year fixed rate for residential house purchase priced at 4.44% for a £999 fee for borrowers with a 10% cash deposit. The equivalent two-year fixed rate is priced at 4.87%.

Fixed rates for residential remortgage are priced at 5.4% (85% LTV) with a £999 fee over two years, or 4.91% over five years (85% LTV). The bank’s best-buy five-year fixed rate deal for remortgage (60% LTV) is unchanged at 3.89% with a £999 fee.

Leeds building society has cut selected fixed rates for new customers by up to 0.37 percentage points, following fellow mutual lenders Coventry and Skipton, which both cut rates this week.

It is Leeds’ second rate cut this month. The building society is offering a competitive two-year fixed rate for residential remortgage at 4.43% with a £999 fee (65% LTV). It also has a two-year fee-free deal at 4.59% (up to 95% LTV) and a five-year equivalent at 5.26%.

Metro Bank has reduced selected residential and buy-to-let fixed rates and launched a five-year fixed rate 95% loan to value deal at 5.79%. Two-year fixed rates at 80% LTV start from 4.99% and five-year rates (also 80% LTV) now start from 4.79%.

TSB has cut selected fixed rates for new residential and buy-to-let customers as well as product transfer deals for existing customers, by up to 0.7 percentage points.

The bank is offering a two-year fixed rate deal for home buyers at 4.79% with a £999 fee (85% LTV) and a five-year equivalent deal at 4.64%. It is also offering two-year rates from 4.59% for BTL remortgage borrowers, while five-year rates start from 4.79%, both deals have a £1,995 fee.

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17 January: Inflation Increase May Put Floor Under Rates

Skipton building society is making further reductions of up to 0.27 percentage points to selected fixed rate mortgage deals for new customers across its range, including a cut to its 100% mortgage rate for first time buyers, writes Jo Thornhill.

It comes just one week after it slashed the cost of a range of its products by up to 0.49 percentage points (see stories below).

The latest changes will be effective from tomorrow (18 January) and will see, among other rate cuts, the mutual lender’s 100% loan-to-value Track Record mortgage cut from 5.52% to 5.35%, fixed for five years.

The Track Record mortgage is for first-time buyers who do not have a cash deposit but who can demonstrate they have successfully made rental payments for the past 12 months. Affordability and loan size calculations are based on past rental payments.

Skipton’s biggest rate cut is on its two-year fixed rate for purchase or remortgage at 75% loan-to-value, which drops from 4.99% to 4.72%. There is a £1,495 fee.

Five-year rates at higher LTVs have also been reduced. Skipton is offering a five-year fix for home purchase at 4.96% (95% LTV) with a £1,295 fee. It also has a fee-free five-year deal at 90% LTV for purchase or remortgage at 4.84%.

Mortgage brokers believe today’s slight rise in inflation could prevent the best fixed rate mortgage deals from falling much lower. The lowest two-year rates are currently at around 4.42%, while five-year fixed rates are around the 3.89% mark.

David Hollingworth at London & Country Mortgages, said: “Swap rates [the rates at which banks lend to each other] have nudged up slightly but so far no higher than levels that have already been seen in recent weeks. We will have to see what happens, but clearly it won’t add weight to the calls for imminent rate cuts by the Bank of England.

“I think we’ll still see cuts in fixed rates and some lenders are trying to keep up with the best-buy deals. If we see swaps edge up that could underline that fixed rates may not keep falling below the current best rates.”

Santander is cutting selected rates, available through brokers, by up to 0.45 percentage points from tomorrow (18 January). It last cut its fixed rates on 10 January.

The bank will reduce the rates of a range of residential fixed rate products as well as new-build and selected first-time buyer deals. Santander has some of the most keenly-priced deals on the market, including a five-year fixed rate for remortgage at 3.89%. Its latest rates will be unveiled tomorrow.

Coventry building society is also cutting rates again for new residential and buy-to-let borrowers, for deals available through brokers. Its last rate cut was on 12 January. The new rates will be available from tomorrow (18 January).

State Bank of India is cutting fixed rates across its buy-to-let lending range by up to 0.5 percentage points, effective from tomorrow (18 January). It will offer a two-year standard BTL fixed rate at 3.65% (50% LTV), although there is a 5% fee. Standard BTL five-year rates start from 4.95%, also with a 5% fee. For a lower fee of 2% the rates rise to 4.85% and 5.25% (two- and five-year fixed respectively).

Specialist loan rates, including for ex-pat and non resident borrowers and for properties with multiple occupancy (HMOs) are also set to be cut.

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16 January: NatWest Also Competes At Sub-4% Level

HSBC has cut selected residential fixed mortgage rates by up to 0.4 percentage points and is offering a competitive fee-free five-year fixed rate at 4.99% for home buyers with just a 5% cash deposit, writes Jo Thornhill.

Among its other new rates is a two-year fixed rate for home purchase for borrowers with a 20% cash deposit at 4.78% with a £999 fee.

The bank has also cut its five-year fixed rate product transfer deal (for existing customers looking to switch to a new fixed rate) at 3.79% (for customers with at least 40% equity in their property – 60% loan to value).

But HSBC has not reduced its five-year fixed remortgage deal for new customers, currently at 3.94% with a £999 fee. Santander, NatWest and Virgin Money all have lower five-year remortgage deals at 3.89%, 3.89% and 3.84% respectively (see stories below).

NatWest has also slashed its residential and buy-to-let fixed rates for new and existing customers, taking its best deals below 4% in line with its competitors.

It is offering a five-year fixed rate for residential remortgage at 3.89% with a £1,495 fee (at 60% LTV), for example, bringing it in line with Santander’s market-leading five-year remortgage fixed rate, also at 3.89% with a £999 fee. NatWest’s two-year equivalent deal is now priced from 4.44% with a £1,495 fee (60% LTV).

It is also cutting the cost of deals for first-time buyers, shared ownership and green mortgages.

Swap rates – the rates at which banks lend to each other – have nudged back down in recent days following rises last week amid general market jitters. But experts believe that, despite rising geo-political tensions, the overall outlook for interest rates remains positive, meaning mortgage rates could continue to fall in the short term before stabliising.

Nick Mendes at broker John Charcol said: “We are returning to five-year swap rates at around 3.5%. HSBC has been quick to react to competitor re-pricing last week with this latest cut to fixed rates. This should further strengthen its hold in the market and capitalise on the New Year wave of optimism around rates for the mortgage market.”

The Mortgage Works, the specialist lending arm of Nationwide building society, has cut selected fixed rates for new and existing buy-to-let borrowers by up to 1.2 percentage points. Among its new rates the mutual lender will offer a two-year fixed rate for home purchase or remortgage at 3.69% with a 3% fee (65% LTV) and a five-year equivalent deal at 3.94% (55% LTV), also with a 3% fee.

Principality building society is cutting selected residential fixed rates (75% LTV up to 90% LTV range) by up to 0.34 percentage points, effective from tomorrow (17 January). Two-year rates will start from 4.49% with a £895 fee at 75% LTV) and equivalent five-year rates start from 4.28% with a £1,395 fee. The mutual lender will also cut buy-to-let rates by up to 0.1 percentage point.

Aldermore has reduced selected fixed rates, available through brokers, and introduced residential fixed rates at 95% loan to value (90% LTV for new builds). It has also cut rates on a range of its buy-to-let mortgage deals and product transfer deals for existing customers.

The Mortgage Lender (TML) has cut selected residential and BTL rates, through brokers, by up to 0.35 percentage points and is offering a five-year fixed rate for standard BTL remortgage at 5.16% with a 3% fee.

Tandem Bank, the specialist digital lenders, has cut residential fixed rate deals by up to 0.96 percentage points. It is offering a two-year fixed rate at 7.49% at 90% loan to value.

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12 January: Wholesale Rate Rises Affect Consumer Deals

Co-operative Bank for Intermediaries has pulled its most competitive sub-4% fixed rate mortgage deals in the wake of rising bank swap rates, indicating fixed rates may stabilise at current levels or may even edge up, writes Jo Thornhill.

The bank, which has offered a five-year fixed rate deal at 3.89% (60% loan to value) for residential purchase and remortgage since 5 January (see stories below), is set to remove this deal from the market, along with other low price two, three and five-year deals.

Co-op still offers some sub-4% deals but only to borrowers with a mortgage loan size of £750,000 or more. The new five-year fixed rate for smaller mortgages starts from 4.02% with a £999 fee (this rate is available up to 90% LTV) and there is a fee-free deal at 4.28%.

The specialist buy-to-let lender Lendinvest has also announced it is removing its deals from the market today with a view to repricing its fixed rates higher from Monday (15 January) due to market volatility.

Swap rates, the interest rates at which banks lend to each other in the market and which dictate the movement of fixed mortgage rates for customers, have been steadily rising in recent days.

It means that although many lenders have been aggressively cutting fixed rates since the new year, this trend could be about to reverse.

First Direct, HSBC, Santander, Virgin Money and Yorkshire building society are among lenders all still offering five-year fixed rates (either for home purchase, remortgage or both) at under 4%.

Despite the move by Co-operative, other lenders, with less keenly priced fixed rates, have continued to reduce the cost of their mortgage deals this week.

Coventry building society has cut residential fixed rates by up to 0.2 percentage points and buy-to-let rates by up to 0.22 percentage points. The mutual lender is offering a five-year fixed rate for residential remortgage from 4.29% (65% LTV) with a £999 fee, for example.

Landbay, the specialist buy-to-let lender has cut fixed rates by up to 0.4 percentage points and has deals at sub-4%. It is offering a two-year fixed rate at 3.94% (up to 65% LTV) although there is a high 6% arrangement fee.

Fleet Mortgages has tweaked rates down across its standard BTL range, as well as deals for limited companies and houses for multiple occupancy (HMOs) by up to 0.15 percentage points. Its standard BTL two-year fixed rate for individual landlords at 75% loan to value is now 4.89% with a 3% fee, and a five-year fix at 70% LTV is at 4.59% with a 5% fee.

Nick Mendes at broker John Charcol said: “Expect to see a few lenders over the next few days reevaluate their fixed rate pricing due to recent market movement.

“I’m not expecting to see a very sharp uplift in fixed rate pricing, but there is likely to be an increase of a few percentage points to give lenders comfort in the event of future market movement.

“It will be interesting to see how long the high street lenders that have priced best buy fixed rate deals at sub-4% in the past week hold out before pulling deals.”

David Hollingworth of London & Country Mortgages, said: “The sub-4% rates will have seen strong demand and lenders have to closely manage their business volumes as well as pricing. It doesn’t necessarily mean that we will see an immediate turnabout by all lenders and service will no doubt have been a key factor in Co-operative’s decision to withdraw.

“However it does serve as a useful reminder that the recent rate cuts that have been feeding through are not guaranteed to be a permanent fixture.”

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11 January: Virgin Among Lenders Competing On Price

Yorkshire building society has cut selected fixed rate mortgage deals by up to 0.65 percentage points and will offer a five-year deal for purchase and remortgage at 3.99%, writes Jo Thornhill.

Among its other new rates the mutual lender will offer a two-year fixed rate, also for home purchase or remortgage at 4.49%. Both this deal and the new five-year fixed rate are on offer to borrowers with 25% equity in their home or cash deposit for purchases and there is a £1,495 fee.

Aidan Smith, YBS mortgage product manager, said: “The markets have responded very positively to the surprise fall in inflation before Christmas and we’ve seen significant falls in market interest rates since then.

“We’re seizing the opportunity this presents to continue passing on as much value as possible to borrowers, including a sub-4% product.”

Other new deals from Yorkshire include a fee-free two-year fix at 5.14% for borrowers with 20% equity or deposit and a fee-free five-year deal at 4.79% for homebuyers with just a 10% cash deposit.

Other lenders have continued to nudge down rates this week:

Virgin Money has reduced selected fixed rates for the second time in a week. The lender’s new deals, available exclusively through brokers for new and existing customers, have been cut by up to 0.8 percentage points.

Virgin is offering a two-year fixed rate for remortgage with an eye-catching rate of 4.24%, but it has a hefty 1% fee which won’t suit all borrowers, Homeowners must have at least 40% equity in their property for this deal. The equivalent deal for borrowers with 30% equity has a pay rate of 4.39%.

Two and five-year fixed rates for home purchase with a £1,295 fee have also been reduced and now start from 4.47% and 3.92% respectively. Selected fixed rates for existing Virgin customers looking for a new mortgage deal (product transfer) have been tweaked downwards. Five-year fixed rates start from 3.88% with a £1,495 fee (65% LTV).

By way of comparison the market-leading five-year deal for remortgage (available to new customers) is currently on offer from Santander at 3.89% with a £999 fee.

MPowered Mortgages has cut the cost of its three-year fixed rate deals by up to 0.22 percentage points. Deals for home purchase at 60% loan to value now start from 4.37% (previously 4.59%) with a £1,999 fee, while equivalent remortgage deals start from 4.46% with the same fee.

Foundation Home Loans, the specialist buy-to-let lender, has reduced selected deals by up to 0.5 percentage points. Its standard BTL five-year fixed rate (for borrowers with good credit) is now at 4.79% with a 6% fee. It is also offering a two-year fixed rate for landlords of houses in multiple occupation (HMOs) at 5.34% with a 3% fee.

Precise Mortgages, the specialist lender which caters for borrowers with poor credit scores, has lowered selected fixed rate deals and extended its residential lending up to 80% loan to value. Its deals, available through brokers, start from 5.44% for a five-year fixed rate with a £995 fee.

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10 January: Niche Lenders Join Pricing War

Skipton building society has reduced the cost of a swathe of its mortgage products by up to 0.49 percentage points, writes Jo Thornhill. This includes the lender’s flagship Track Record mortgage – a zero-deposit deal for first-time buyers – which has been pegged down to 5.52% from 5.65%.

The changes, which are effective for new borrowers from tomorrow (11 January), will see the mutual lender offer a five-year fixed rate for remortgagers priced at 4.99% for for a 10% deposit (or 90% LTV) at a £1,295 fee, and a two-year deal (fee-free) for shared ownership mortgages at 5.79% (also 90% LTV).

Skipton is also cutting product transfer deals for existing customers by up to 0.66 percentage points.

The lender’s Track Record mortgage is aimed at first-time buyers and those who have not owned a home for at least the past three years. It is fee-free and available at up to 100% of the property value. However, borrowers must be able to demonstrate they have successfully made rental payments for the past 12 months. Mortgage affordability is then calculated on this cost.

For example, an applicant who has paid monthly rent of £1,500 could borrow up to around £275,000, according to Skipton – as it would make their monthly mortgage repayments roughly the same as their previous rental payments.

Elsewhere, Accord, the specialist lender of Yorkshire building society, has announced cuts of up to 0.56 percentage points on its residential mortgage range from tomorrow (11 January). It follows cuts of up to 0.95 percentage points to its buy-to-let range, which apply from today (10 January).

Among its new residential deals Accord will offer a five-year fixed rate for remortgage at 4.95% (90% LTV) with a £995 fee, plus £500 cashback and a two-year rate for home purchase at 4.73% (75% LTV) with a £1,995 fee.

Pepper Money has made cuts across its entire mortgage range by up to 0.98 percentage points. The specialist lender, which caters to borrowers with a non-standard or adverse credit history, is offering a five-year fixed rate priced at 6.39% (75% LTV) with a £1,495 fee under its Pepper18 Light product. However, it’s only available to customers who have not had a debt default in the last 18 months.

Zephyr, the buy-to-let lender, has cut its two-year fixed rates by up to 0.55 percentage points and five-year fixed rates by up to 0.65 percentage points. Two-year deals start from 4.8% with a 5% fee, while five-year deals start from 5.3% with the same fee (both at 65% LTV).

However, specialist buy-to-let lender Keystone Mortgages has bucked the trend by increasing selected home loan rates. The lenders says: “Due to the recent volatility of swap rates, we have repriced and increased all five-year fixed rates by 0.10% and our product transfer and Switch & Fix rates have increased by 0.20%.”

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9 January: Five-Year Deals On Offer From 3.89%

Santander has announced it is cutting selected fixed rate deals by up to 0.82 percentage points from tomorrow (10 January) and will offer a market leading five-year deal for residential remortgage at 3.89%, writes Jo Thornhill.

The bank’s reduced fixed rates, available through brokers, which will be unveiled in full tomorrow, will apply on a range of residential and buy-to-let borrowing deals for new customers and on product transfer rates for existing customers. But as well as the table-topping five-year remortgage deal, Santander has said it will offer a similar deal for home purchase at 3.94%.

Both five-year fixed rates will have a £999 fee and be available for borrowers with at least 40% equity in their home, or cash deposit in the case of homebuyers.

Santander is the latest of several major lenders to trim the cost of fixed rate deals since the start of the year (see stories below) on the back of growing market confidence that interest rates have peaked.

Barclays has also announced cuts of up to 0.5 percentage points on selected purchase fixed rates. The reductions take the cost of the lender’s two-year fixed rate for purchases down to 4.17% (from a previous 4.62%) with a £899 fee and 40% deposit. The same deal for borrowers with a 25% deposit (75% LTV) has been reduced to 4.2% (from 4.7%).

Barclays has also cut its two-year fix under its Deposit Guarantee Scheme to 5.5% from 5.8%. The deal, which requires just a 5% deposit, has no fee and is available on loans up to £570,000. The five-year fix equivalent under the scheme has been reduced to 6.27%.

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8 January: Choice Broadens At Lower Rate Levels

Virgin Money, plus a succession of smaller and specialist mortgage lenders, have reduced their fixed mortgage rates in the wake of last week’s price war among major lenders (see stories below), which saw five-year fixed rates fall under 4% for the first time in more than seven months, writes Jo Thornhill.

High street lender Virgin Money has announced changes to its residential purchase rates, available through brokers, including rate cuts at higher loan to value ratios. From tomorrow (9 January) it will offer a two-year fixed rate for home purchase at 4.57% (65% LTV) with a £1,295 fee, for example. The same deal at 90% LTV is cut to 4.97%. It is also offering a five-year fix for home purchase at 4.48% (90% LTV) with a £1,295 fee.

The bank’s remortgage exclusives with a 1% fee, available through brokers, will be cut by up to 0.25 percentage points with five-year rates starting from 4.34% and BTL exclusive remortgage deals will start from 4.32%

Bank of Ireland has slashed the cost of all residential mortgage rate deals, effective tomorrow (9 January). The bank is offering two-year fixed rates from 4.45% and five-year deals from 4.19%. Both deals are at 60% LTV and have a £1,495 fee

Accord, the specialist lending arm of Yorkshire building society,the ninth biggest lender, has announced it is cutting buy-to-let fixed mortgage rates for new customers by up to 0.95 percentage points from tomorrow (9 January). The lender will cut two-year fixed rates for BTL remortgage and purchase by up to 0.5 percentage points, three-year rates will be cut by up to 0.7 percentage points, while selected five-year rates will be reduced by up to 0.95 percentage points. New rates and deals will be unveiled tomorrow.

Newcastle building society has cut selected fixed rates by up to 0.65 percentage points. The mutual’s five-year fixed rates for remortgage now start from 4.65% (max 80% LTV) with a £999 fee. Two-year deals start from 5.05%

Principality building society has reduced selected residential and BTL fixed rates by up to 0.37 percentage points. The new deals, effective from Wednesday (10 January), will see cuts in the cost of borrowing between 75% loan to value and 95% loan to value. It is offering a fee-free five-year fixed rate at 5.15% (85% LTV). There are also cuts to rates on mortgages for holiday lets

Suffolk building society has cut selected BTL and holiday let mortgage rates and reintroduced residential deals at 95% loan to value. It will offer two and three-year fixed rates for borrowers with just a 5% deposit or equity at 6.15%. The mutual will also offer a five-year fixed rate for BTL remortgage at 5.69% (80% LTV)

West One, the specialist lender, has cut residential fixed rates by up to 1.0 percentage point. Its deals, which cater for borrowers with a non standard credit history, start at 5.69% for a five-year deal or 5.99% over two years. The lender has also increased its maximum loan to value from 75% up to 90%.

Paragon Bank has cut rates by up to 0.7 percentage points on its five-year fixed-rate BTL mortgage deals. The specialist BTL lender is offering five-year fixed rate deals from 4.5% with a 5% fee. The most energy efficient properties (energy performance certificate rating A to C) can get five-year rates from 4.45% and HMOs (houses in multiple occupation) can get rates from 4.7%

5 January: NatWest, Clydesdale Also Cutting Fixed Rates

Co-operative Bank for Intermediaries has slashed its fixed rate mortgage deals by up to 1.07 percentage points in response to the ongoing rate war in the home loans market, writes Jo Thornhill.

Among its new deals, available through brokers from Tuesday (9 January), is a five-year fixed rate for home purchase or remortgage at a market leading rate of 3.89% with a £999 fee. However, this deal is on offer only to borrowers with at least 40% equity in their property or cash deposit to put towards their purchase.

Co-op follows First Direct, HSBC, NatWest, Halifax, Clydesdale Bank and Leeds building society, among others, in reducing the cost of mortgage borrowing since the new year.

Co-op has said it will also offer a fee-free two-year fixed rate at 5.18% for borrowers with just a 5% cash deposit or equity in their home. Borrowers get £250 cashback on completion.

Other deals include a fee-free five-year fixed rate at 4.28% at 90% loan to value with £500 cashback on completion.

The lender is also offering a five-year fixed rate product transfer deal (for existing customers looking to switch to a new rate) at 3.79% with a £749 fee (60% LTV).

Broker Nick Mendes at John Charcol says: “Co-op has made a statement of intent to kick off the year with some impressive rate pricing. A five-year rate at 3.89% makes it the new market leader. Its product transfer rates are equally impressive for existing customers.”

NatWest, which also announced its rate cuts today, is offering, through brokers, two-year fixed rates for residential remortgage from 4.64% (60% LTV) with a £1,495 fee and equivalent five-year deals from 4.58%. For home purchase, rates start from 4.55% over two-years or 4.19% over five-years, also with a £1,495 fee.

NatWest has also reduced rates for buy-to-let borrowing, shared equity and help to buy, plus on its product transfer range (deals for existing customers looking for a new rate).

Clydesdale Bank, part of Virgin Money, has also cut selected rates from today (5 January). Among its new rates, available through brokers, it is offering a two-year fixed rate for residential remortgage at 4.85% (65% LTV) with a £1,488 fee and an equivalent five-year deal at 4.60%.

Rates for home purchase start from 4.61% over two years or 4.27% for five years.

MPowered mortgages has reduced fixed rates across its range, available through intermediaries. It is offering two-year fixed rates for residential remortgage from 4.54% and five-year deals from 4.13%.

Bank of England’s latest Money and Credit Report shows net mortgage approvals for house purchases rose from 47,900 in October 2023 to 50,100 in November.

Net approvals for remortgaging also increased from 24,000 in October to 27,000 in November, suggesting resilience in the housing market towards the end of 2023.

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4 January: Major Lenders Anticipating Bank Rate Cut

First Direct is following its parent bank HSBC with significant rate cuts across its fixed-rate repayment mortgage range, including the launch of two deals tomorrow (Friday), priced below 4%.

Earlier this week Halifax, the UK’s largest mortgage lender, kicked off the first of the New Year’s rate reductions, continuing a market trend from 2023 (see stories below).

Lenders are optimistic that the Bank of England will begin to trim its Bank Rate (currently 5.25%) in the coming months, leading to lower borrowing costs for homebuyers and homeowners remortgaging.

The lowest rates announced by First Direct will apply to its longer-term fixed rate deals.

Its five-year fix is repriced down to 3.99% from 4.64%, while its 10-year fix is reduced by a chunky 98 percentage points from 4.97% also to 3.99%. Both deals require a 40% deposit and are available to new and existing customers.

For shorter-term two- and three-year fixes, rates are now priced below 5% for two at loan-to-values (LTVs) of up to 85% (15% deposit). Rates begin at 4.54% for new customers and 4.49% for existing customers switching deals.

For those with smaller deposits, 90% LTV mortgages start at 4.69%, with 95% LTV mortgages starting at 5.44%.

Existing customers with an offset mortgage will see a 0.19% reduction in the rates across the range of two-year deals.

First Direct deals either carry no booking fee or a fee capped at £490.

TSB is also cutting rates for a range of mortgage products with a two-year fixed term, again from tomorrow. These will be on sale from Friday 5 January.

Among the reductions is an interest rate fall of 0.55% on two-year first-time buyer and home mover loans, which now start at 4.54% for LTVs up to 60% with a £995 fee.

Two-year remortgages are being reduced by up to 0.40%. Rates now start at 4.44% for an LTV up to 60% with a £995 fee.

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3 January: Bank Responds To Cuts By Halifax And Leeds

HSBC has cut selected fixed rates across a broad range of its residential and buy-to-let (BTL) home loans from today as experts predict a growing price war could push mortgage rates lower.

The move – which includes deals below the psychologically important 4% level – follows rate reductions yesterday by Halifax and Leeds building society (see story below).

HSBC has lowered rates, through brokers, for new customers looking for a residential or BTL remortgage deal, including first-time buyers. It has also cut rates for international residential remortgage and on product transfer deals (new rates for existing HSBC customers) across BTL and residential loans.

It is offering two-year residential remortgage rates from 4.49% and five-year equivalent deals from 3.94%, both with a £999 fee. Ten-year fixed rates also start from 3.99%. These deals are all available for borrowers with at least 40% equity in their property.

Nick Mendes at broker John Charcol said: “HSBC is the latest high street lender to reprice downwards following similar changes in the market in recent days.

“Lenders are looking to capitalise on the pent-up purchase demand and to grab borrowers coming to the end of their fixed rate in the first half of 2024, so we should expect to see a continued rate battle between lenders.”

2 January: Reductions Apply Across Range Of Deposit Levels

Halifax, the UK’s largest mortgage lender, has slashed rates on remortgage products by up to 0.83 percentage points, with effect from today.

New deals include a two-year fix priced at 4.81% (reduced from 5.64%) available at 75% loan to value or 4.68% (reduced from 5.25%) at a 60% loan to value. Both deals charge a £999 arrangement fee.

Borrowers with small deposits also benefit, with Halifax cutting its 90% loan to value five-year fix from 5.68% to 5.27%, also with a £999 fee.

The deals are available through brokers or directly from the lender. Applicants have a full six months to complete the deal from the point of offer.

Product transfer deals, for borrowers already with Halifax and looking to switch deals, have been cut by up to 0.92%.

Leeds Building Society also announced rate cuts today across its mortgage range. Newly-priced deals include a two-year fixed rate reduced to 5.59% at 95% loan to value – or 4.6% at a 75% loan to value. Both deals charge a £999 fee.

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19 December: Rates Cut By Up To 0.43% From Wednesday

Barclays is cutting selected fixed rate mortgage deals by up to 0.43% across residential and buy-to-let borrowing, effective tomorrow (20 December), writes Jo Thornhill.

The lower rates are available for new customers. Selected product transfer deals, for existing mortgage customers, will also be cut.

The bank is offering a two-year fixed rate for home purchase at 4.62% with a £899 fee. This is available to buyers with at least 40% cash deposit (60% loan to value).

For remortgage customers, Barclays has two-year fixed rate deals from 4.98% with a £999 fee (60% LTV). Premier banking customers can get the same deal at a slightly lower rate of 4.95%.

It is also offering a five-year fixed rate for home purchase or remortgage at 4.32% with a £1,999 fee. But this deal is only available for large loans (£2 million up to £10 million) at 60% loan to value.

Buy-to-let rates have also been reduced. Barclays is offering a fee-free five-year fixed rate for remortgage at 5.33% (60% LTV) and an equivalent fee-free two-year equivalent at 6.3%.

13 December: Lenders Confident Rate Cycle Has Peaked

Virgin Money is cutting selected fixed rates for new and existing customers by up to 0.36 percentage points from tomorrow (14 December), writes Jo Thornhill.

A number of smaller lenders have also cut fixed rates as the market now widely expects the Bank of England’s Monetary Policy Committee will keep the Bank Rate rate at 5.25% when it meets tomorrow, for the final time in 2023.

Among the new Virgin rates, available through brokers, is a two-year fixed rate for residential remortgage at 4.59%. The rate is market-leading for a two-year fixed rate remortgage, but it requires borrowers to have at least 40% equity in the property, and there is a 1% arrangement fee.

An equivalent deal at 70% loan to value (requires at least 30% equity in the property) will fall to 4.69%.

Buy-to-let rates have also been cut. Virgin is offering a five-year fixed rate for BTL remortgage at 4.74% (60% LTV) with a 1% fee. Alternatively there is a five-year fixed rate for remortgage at 4.59% (also 60% LTV) with a £2,195 fee.

HSBC is cutting selected product transfer deals for its existing residential and buy-to-let customers from 14 December. New rates will be revealed then
Family building society has reduced fixed rates for residential and BTL mortgage deals by up to 0.55 percentage points. It is offering residential remortgage rates from 5.14% for a five-year fix and from 5.74% over two years
MPowered Mortgages has cut selected residential fixed rates by up to 0.3 percentage points. It is offering five-year fixed rates from 4.84% with a £1,999 fee (60% LTV) or the same deal at 4.94% with a £999 fee, or alternatively a fee-free deal at 4.99%. Two-year fixed rates for remortgage start from 5.41% with a £999 fee
Generation Home (Gen H) has cut rates across its entire range by up to 0.25 percentage points. It is offering a two-year fixed rate at 5.06% with a £999 fee and a five-year deal at 4.74% (both at 60% LTV). Borrowers need to use Gen H’s partner legal service for conveyancing to get these rates.

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11 December: Rents Soat As Landlords Pass On Rate Rises

Skipton building society is cutting selected fixed-rate deals for existing residential and buy-to-let customers from tomorrow (12 December), writes Jo Thornhill.

The mutual lender has cut rates on 16 product transfer deals. For residential customers it is offering a five-year fix at 4.65% with a £1,295 fee (60% LTV).

It is also offering a five-year fix for existing BTL customers at 5.24% and a two-year deal at 5.99% (both 75% LTV). Deals have a £995 fee.

Skipton has also reinforced its commitment to helping first-time buyers and those with small (5%) deposits onto the property ladder by introducing mortgage deals at 95% loan-to-value (LTV) for the purchase of new build flats.

Previously, the mutual would not lend at this high LTV for new build flats due to the higher risks associated with new builds due to their price volatility.

It follows Skipton’s launch of its Track Record mortgage in May. This home loan can be taken at 100% loan to value (with no deposit) by borrowers who have a proven track record of making rental payments for at least 12 months.

Tenants have paid more than £85 billion in rent over the past year, according to a report from estate agent Hamptons. It is more than double the amount spent on rent in 2010 when the figure reached £40 billion.

The increase has been driven by a 25% increase in the number of households who are renting as well as the rise in rents, which in turn has been caused by higher landlord mortgage costs. The average rent on a newly let property increased to £1,348 per month in November. This is £125 more than in the same month last year (a 10.2% uplift).

Rents have risen fastest in London, where the average monthly rent is now at £3,174, over 13% more than a year ago.

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8 December: Santander Follows Nationwide’s Lead With Cheaper Long-Term Fixes

Santander has cut fixed rates for residential and buy-to-let borrowers by up to 0.32 percentage points, writes Jo Thornhill. The reductions apply to both purchase and remortgage deals and are available to new and existing customers.

Among its new deals Spanish-owned Santander is offering a five-year fixed rate for home purchase at 4.39% with a £999 fee. It is available to borrowers with at least a 40% deposit towards their purchase. However, while competitive, the deal is trumped by Nationwide’s five-year fix which is priced at 4.29% for purchases (see story below).

Santander is offering five-year fixed rates for remortgage customers from 4.71%, three-year rates from 4.96% and two-year rates from 4.92%. All deals have a £999 fee.

Buy-to-let rates for standard remortgage now start from 4.71% for a five-year fix and 5.17% for a two-year fix (60% LTV). These deals come with a £1,749 fee.

Co-operative Bank for Intermediaries: (formerly Platform) has slashed rates on residential and BTL deals for new and existing customer deals by up to 0.45 percentage points. Among its deals is a five-year fixed rate for residential remortgage (60% LTV) at 4.68% with a £1,999 fee. Equivalent two-year rates start from 4.87%

Halifax for Intermediaries has unveiled its new fixed rates following a rate cut yesterday (7 December). It is offering a five-year fix for home purchase at 4.37% with a £999 fee (60% LTV). Among its remortgage deals it is offering two-year fixed rates from 5.25%, three-year and five-year deals both from 4.97%. All deals are available at a 60% LTV and come with a £999 fee.

The latest round of cuts come less than a week before the Bank of England next meets (14 December) to decide on interest rates, which are currently at 5.25%.

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7 December: Thousands Facing ‘Mortgage Shock’

Nationwide building society is cutting selected fixed rates by up to 0.31 percentage points from tomorrow (8 December). Among its new rates it will offer a five-year fix for home purchase at a market-leading rate of 4.29%.

This table-topping deal, which has been reduced by 0.14 percentage points, is available to home buyers with at least 40% deposit and has a £999 arrangement fee. The mutual’s equivalent two-year fixed rate for home purchase will start from 4.65%.

Nationwide has also cut fixed rates for remortgage (although these rates are not market-leading), with five-year fixed rates from 4.68% with a £999 fee (60% LTV). It has also cut product transfer deals, for existing borrowers looking to switch to a new deal.

The Mortgage Works, the specialist buy-to-let lending arm of Nationwide, has also announced rate cuts of up to 0.4 percentage points across its range. It is offering two-year fixed rates for BTL purchase or remortgage at 4.19% with a 3% fee (65% LTV).

Halifax for Intermediaries is cutting selected fixed rates by up to 0.25 percentage points, also from tomorrow. But its new deals will not be unveiled until the morning.

Broker Nick Mendes at John Charcol, says: “Nationwide has released what could be the final best buy rate for the year. This puts it firmly ahead of the competition in a strategic move to ensure they remain in pole position.”

Yorkshire building society has announced rate reductions of up to 0.35 percentage points across its fixed rate range. The biggest rate cuts are for borrowers with the smallest cash deposit or equity in their home.

The society is offering two and three-year fixed rates deals for remortgage at 4.84% (75% loan to value) with a £1,495 fee and a five-year fixed rate for home purchase at 90% LTV at 5.24%. This deal has no fee and pays £2,000 cashback on completion.

The Bank of England has forecast that 900,000 borrowers will experience ‘severe mortgage rate shock’ in 2024 when their existing fixed rate deals come to an end.

These households will see their monthly mortgage payments rise by more than £500. Of these borrowers, 20% will see monthly payments rise by more than £1,000.

The findings, in the Bank’s latest Financial Stability Report, show that, for the typical residential mortgage holder coming off a fixed rate deal between the second quarter of 2023 and the end of 2026, their monthly mortgage repayments are set to rise by around £240, or 39%.

5 December: Rightmove Expects Price Falls In 2024

First Direct is slicing the cost of its fixed rate mortgage deals, with the biggest cut – 0.45 percentage points – applied on deals for borrowers with just a 5% deposit or equity (95% LTV), writes Jo Thornhill.

The online bank, which only offers mortgages direct and not through brokers, has reduced its two-year and three-year fixed rates at 95% LTV to 5.99%. This is down from 6.44% and there is no arrangement fee. The equivalent deal over five years is now priced at 5.64%.

Deals at 90% loan to value have been slashed by up to 0.3 percentage points and start from 5.09% for a five-year fix.

At the other end of the market, First Direct is offering a five-year fixed rate deal for new and existing customers with at least 40% equity or deposit at 4.64% with a £490 fee.

Accord, the specialist lending arm of Yorkshire building society, has cut selected buy-to-let rates by up to 0.3 percentage points. The intermediary-only lender is offering a two-year fixed rate at 4.79% (down from 4.94%) for BTL purchase at 60% LTV. There is a £3,495 fee.

Over a five-year term Accord is offering a rate of 4.99% (down from 5.19%) at 75% LTV for BTL remortgage. There is a £1.995 fee.

Online property portal Rightmove says it expects average asking prices for properties coming to market to be 1% lower by the end of 2024 as the market continues to move back to ‘more normal’ levels of activity after the pandemic period.

A year ago, Rightmove predicted average new seller asking prices would drop by 2% in 2023, and they are now 1.3% lower year-on-year.

Rightmove says mortgage rates will settle in the New Year but will remain elevated, and this is likely to have a dampening effect on buyers’ budgets.

30 November: Virgin Joins Fray With Raft Of New Deals

Barclays Bank is cutting fixed rates for residential property purchase from tomorrow (1 December), which will include a market-leading five-year deal at 4.39%, writes Jo Thornhill.

The deal will be available to home buyers with at least a 40% cash deposit and there is an £899 arrangement fee.

Barclays will also offer a fee-free five-year fixed rate for home purchase at 4.7% (75% loan to value) and a five-year fix at 4.95% (90% LTV) with a £999 fee.

It follows Virgin Money, which has just launched a range of remortgage, purchase and product transfer deals, exclusively available through brokers, and cut selected fixed rates. Among its highlights the bank is offering a five-year fixed rate for purchase at 4.42% (65% LTV) wth a £1,295 fee.

A product transfer is where an existing customer switches products within the Virgin range.

Virgin has unveiled six remortgage exclusives at 60% and 70% loan to value, with free legal work and valuations. Among the new deals is a two-year fixed rate at 5.12% (70% LTV) with a £999 fee and a fee-free five-year fix at 4.8% (60% LTV).

Virgin is also offering new purchase exclusive deals with £500 cashback on completion. They include a two-year fixed rate at 5.23% (86% LTV) with a £1,295 fee and a five-year equivalent deal at 4.69%.

Selected residential and buy-to-let product transfer deals have been cut by up to 0.18 and 0.2 percentage points respectively, and selected buy-to-let fixed rates for new borrowers have been cut by up to 0.28 percentage points.

Aldermore is cutting selected residential and buy-to-let fixed rates for new and existing customers from tomorrow (1 December). Among its new deals is a five-year fixed rate for individual and company landlords (for single residential BTL properties) at 4.69% with a 7% fee (65% LTV).

Newcastle building society has reduced selected buy-to-let fixed rates by up to 0.36 percentage points. It is offering a five-year fixed rate at 5.55% (80% LTV) and equivalent two-year deals from 5.85%.

Nationwide building society has reduced fixed rates on selected product switcher deals (rates for existing customers looking for a new deal) and further advances by up to 0.31 percentage points. It is offering two-year fixed rates from 4.82% (60% LTV) with a £999 fee and five-year fixed rates at 5.3% (95% LTV) with a £999 fee.

NatWest is cutting product switcher rates, available through brokers, by up to 0.26 percentage points on residential deals and up to 0.4 percentage points on buy-to-let deals. It is offering two-year fixed rates from 4.98% and five-year fixed rates from 4.79% (60% LTV) with a £995 fee.

Molo, the specialist buy-to-let lender has cut selected fixed rate deals by up to 0.8 percentage points. Standard BTL deals start from 4.65% for a two-year fixed rate and from 5.75% for a five-year fix.

29 November: Mortgage Approvals Up – Bank Of England

Santander has confirmed its new mortgage rates. The bank is offering a five-year fixed rate for home purchase from 4.64% and equivalent deals for remortgage from 4.83%, writes Jo Thornhill.

Its lowest two-year fixed rate for purchase has fallen from 4.99% to 4.94% and its lowest two-year fixed rate for remortgage is now at 5.09%. These five-year and two-year fixed rate deals from Santander are all available to borrowers with at least a 40% cash deposit or equity (60% loan to value). They all have a £999 fee.

The five-year fixed rate for remortgage at 85% LTV is now priced at 5.44% with a £999 fee. The bank is offering three-year fixed rates for remortgage from 4.99% with a £999 fee (60% LTV).

Coventry building society is cutting rates across its mortgage range again from tomorrow (30 November). The mutual last cut rates on 21 November.

Nick Mendes, mortgage broker at John Charcol, says: “This week is starting to feel like the last push for lenders to secure the remaining opportunities before the winter break. Over the next fortnight I expect to see lenders reprice one last time before they turn their attention towards the new year.

“The past week has seen a raft of repricing from high street lenders and building societies, with the latest notice coming from Coventry. Given how competitively Coventry is currently priced, and it is among the best buys, this latest reprice could be the moment we see another sub-4.5% deal.”

Mortgage approvals for house purchases increased to 47,400 in October, up from 43,700 in September, according to the latest figures in the Bank of England’s Money and Credit report. Approvals for remortgaging also increased from 20,600 in September to 23,700 in October.

The number of remortgages had fallen in previous months as more borrowers decided to take a product transfer deal with their existing lender. This option can be attractive when rates are rising, as the customer does not need to undergo a full affordability assessment.

The increase in remortgage activity last month is perhaps an indicator of an improving mortgage market for borrowers.

Mark Harris, chief executive at mortgage broker SPF Private Clients, says: ‘Mortgage approvals rose as the pause in interest rate hikes [by the Bank of England] gave borrowers hope that rates may have peaked.”

28 November: Bank Vies With HSBC, Virgin For Top Slot

NatWest has slashed selected fixed rates by up to 0.4 percentage points for residential deals and up to 1.06 percentage points on buy-to-let borrowing. It is offering a five-year fixed rate for residential home purchase at 4.47%.

Its new low rate deal, available for home buyers with at least 40% cash deposit (60% loan to value), has a £1,495 fee. But though it breaks the psychological 4.5% rate barrier, it is not market leading as Nationwide building society has claimed top spot with a similar deal at 4.43% with a £999 fee.

Nick Mendes at broker John Charcol said: “NatWest is the latest lender to reprice purchase rates closer to the 4.5% benchmark, but it has not surpassed Nationwide’s rate. This latest reprice brings NatWest closer to HSBC and Virgin, who have also gone sub 4.5%, but it is not table-topping.”

NatWest is also offering two-year fixed rates for residential remortgage from 4.87% and five-year equivalent fixed rates from 4.73%. Both deals are at 60% LTV and have a £1,495 fee.

Santander for Intermediaries is cutting selected fixed rates, available through brokers, for new and existing customers by up to 0.29 percentage points. The new deals will be unveiled and live from tomorrow (29 November). Standard residential rates, buy-to-let deals and rates for new build mortgages are all set to get a haircut. Fixed rates for residential product transfer (for existing customers looking for a new deal) will be cut by up to 0.1 percentage point, while BTL transfer deals will be cut by up to 0.17 percentage points.

Bank of Ireland has reduced selected deals in its Bespoke range, available through brokers. Available from tomorrow (29 November), these include a two-year fixed rate for purchase or remortgage at 4.97% with a £1,495 fee (60% LTV) or an equivalent five-year fixed rate deal at 4.69%.

The Mortgage Works, the buy-to-let arm of Nationwide building society, has cut selected fixed rates by up to to 0.3 percentage points. The reductions apply to limited company buy-to-let mortgages and lending for houses in multiple occupation (known as HMOs). The lender’s two-year fixed rate at 75% LTV in this market sector, for purchase and remortgage, is now at 5.19% with a 3% fee. The five-year rate at 75% LTV is now 4.89% with a 5% fee.

Barclays Bank has lowered fixed rates for home purchase for borrowers with a small deposit, as well as cutting rates on deals for larger home loans. The bank is offering a two-year fixed rate for residential purchase at 6.3% (down from 6.7%) at 95% LTV. This deal is part of the government-backed mortgage guarantee scheme. The two-year fixed rate at 85% LTV has fallen slightly to 5.77% (down from 5.79%). These two-year deals are both fee-free.

At the same time, Barclays has slashed fixed rates by up to 0.57 percentage points for purchase and remortgage on loans of between £2 million and £5 million.

Other lenders making mortgage changes include:

Principality building society has cut residential and buy-to-let fixed rates by up to 0.23 percentage points. The mutual is offering a five-year fixed rate for residential purchase or remortgage at 4.69% with a £1.395 fee (75% LTV)
Bath building society has reduced fixed rates for borrowers with a small deposit and for borrowers using the Rent A Room scheme, as well as cuts to selected buy-to-let and holiday let mortgage deals. Rent A Room enables homeowners to let a room in their own home and earn rent tax-free up to £7,500 per year. A five-year fixed rate for Rent A Room homeowners (80% LTV) is 6.74%. Standard residential five-year fixed rates at 80% LTV are now priced at 5.09% and at 95% LTV the rate is 5.29%
West Bromwich building society has increased its maximum mortgage term from 35 years to 40 years. The new term, for residential customers on a repayment mortgage, will be available on mortgages taken directly from the building society or through brokers. The change brings West Brom into line with other mainstream mortgage lenders, who already offer a 40-year mortgage term.

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24 November: Accord & Paragon Announce Fresh Cuts To Fixes

Accord Mortgages, the broker-only lending arm of Yorkshire building society, has cut selected fixed residential mortgage rates by up to 0.33 percentage points, effective from Tuesday (28 November), writes Jo Thornhill.

It follows major lenders including Nationwide building society, Virgin Money, HSBC, Santander, NatWest and TSB, which all slashed their mortgage rates this week as confidence grows that the interest rate cycle has peaked.

Among the highlights in Accord’s new range is a fee-free deal for the purchase of a new-build home under the Deposit Unlock Scheme at 95% loan to value at 5.65% (down from 5.98%). There is £250 cashback paid on completion of the deal.

The mutual lender is also offering a five-year fix (75% LTV) at 4.86% with a £1,495 fee and a two-year fix (90% LTV) at 5.78% with a £995 fee.

Specialist buy-to-let lender Paragon has cut selected rates by up to 0.4 percentage points. Its two-year fixed rates for landlords now start from 4.19% with a 5% fee (for energy-efficient homes with energy performance certificate ratings A to C). Five-year fixed rates start from 4.69% with a 7% fee.

These deals are for standard, single self-contained BTL properties, and are available for purchase and remortgage.

LendInvest, the buy-to-let lender, has reduced rates across its fixed rate mortgage range by up to 0.3 percentage points. Two-year fixed rates now start from 3.99% (75% LTV) with a 7% fee.

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22 November: HSBC Trims Rates For Second Time This Month

Nationwide building society has slashed its fixed rates by up to 0.43 percentage points, effective from tomorrow, and will offer a deal for home purchase at 4.43%. It is the first time fixed rates have breached the 4.5% barrier in almost six months, writes Jo Thornhill.

The market-leading deal for home purchase is available to borrowers with at least 40% equity or cash deposit towards their purchase and there is a £999 fee. Equivalent two-year fixed rates for purchase will now start from 4.79%.

Selected remortgage fixed rates have been cut by Nationwide, including its three-year deal at 60% loan to value, which falls to 4.94% (down from 5.08%) with a £999 fee. At 85% LTV the mutual is offering a five-year fix at 5.11% with a £999 fee.

Nationwide is also cutting product switcher rates for existing customers looking for a new deal by up to 0.15 percentage points.

HSBC has launched lower fixed-rate deals following cuts of up to 0.35 percentage points across its mortgage range. It’s the bank’s second rate cut in eight days.

The UK’s sixth-biggest mortgage lender has reduced rates on selected residential and buy-to-let remortgage and purchase deals as well as cutting rates on product transfer deals (rates for existing customers looking for a new deal) by up to 0.25 percentage points.

Among the highlights, HSBC is offering a five-year fixed rate for home purchase at 4.89% for borrowers with a 10% deposit (90% loan to value) with a £999 fee. The fee-free equivalent deal is now priced at 4.99%.

It is also offering a market-leading two-year fixed rate for remortgage at 4.93% (60% LTV) with a £999 fee. The fee-free equivalent is now priced at 5.16%. There is also a five-year buy-to-let remortgage deal at 4.89% (75% LTV) with a £1,999 fee.

Foundation Home Loans, the specialist buy-to-let lender, has cut selected rates and is offering a two-year fix at 6.59% (76% LTV) with a £1,495 fee and a five-year rate (also 75% LTV) at 6.24% with a 1% fee. It has a seven-year fix available at 6.69% (75% LTV) with a 1% fee.

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21 November: Competition Reflects Stabilising Conditions

HSBC is cutting fixed rates across its mortgage range from tomorrow (22 November), including some of its most competitive deals, which brokers say could dip as low as 4.5%, writes Jo Thornhill.

The bank, which already offers a five-year fixed rate for residential remortgage at 4.51% for existing HSBC customers under its product transfer deals, could look to match this deal for new borrowers when it unveils its rates tomorrow morning.

TSB has also announced rate cuts of up to 0.3 percentage points on residential mortgage fixed rates from tomorrow, plus cuts of up to 0.85 percentage points on shared ownership and shared equity deals.

Lenders across the market are continuing to cut mortgage rates following the freeze to the Bank of England Bank Rate earlier this month at 5.25%. It has given providers confidence that the current interest rate cycle has peaked and that rates could fall next year.

Virgin Money is cutting rates for home purchase and larger mortgage loans (over £1 million). Two and five-year fixed rates for larger loan remortgage are available at 5.4% and 4.99% respectively at 75% loan to value with a £1,995 fee. Among the purchase deals, Virgin is offering a five-year fix for residential home purchase at 4.53% (65% LTV) with a £1,295 fee. Buy-to-let fixed rates have also been reduced. The bank is offering a five-year BTL deal at 4.62% (60% LTV) with a 3% fee.

Santander has cut selected fixed rates for new and existing customers by up to 0.25 percentage points. It is offering a two year fixed rate for home purchase at 4.99% (down from 5.14%) for borrowers with at least a 40% deposit towards their property. There is a £999 fee.

Two-year fixed rates for remortgage now start from 5.15%, with the same fee (60% loan to value). For remortgage, the bank’s lowest five-year fixed rate is now at 4.86% (60% LTV) with a £999 fee.

Santander also cut rates across its three-year fixed rate deals, which are growing in popularity as rates have come down. Its three-year deal for remortgage starts at 4.99% (60% LTV) with a £999 fee.

At the same time Santander has announced that all new fixed and tracker rate mortgage deals (for new deals and product transfers) taken out from today (21 November) will revert to its Standard Variable Rate (SVR) at the end of their deal. Its SVR is 7.5%.

In contrast, mortgage deals taken up until 20 November will still revert to the bank’s ‘Follow-on’ rate, which is 8.5%.

Coventry building society has also cut fixed rates. Among the highlights is a five-year fixed rate for remortgage at 4.85% (65% LTV) with a £999 fee. The deal pays £350 cashback on completion.

NatWest has cut its fixed rate deals for existing customers by up to 0.4 percentage points. It is offering a two-year product switch deal with no fee at 5.4% (down from 5.8%). NatWest customers need at least 40% equity in their property to be eligible. At 75% LTV the deal is 5.48%.

Gen H has cut fixed rates across its range by up to 0.5 percentage points. It is offering a two-year fixed rate at 4.99%, three-year rates from 4.84% and five-year rates from 4.87% (all 60% LTV) with a £999 fee. To get the lowest rates borrowers must use Gen H’s legal service for conveyancing.

Aldermore has launched a new range of buy-to-let fixed rates and residential deals and increased its maximum age limit for lending up to 75. Among its deals it is offering a standard BTL five-year fix at 5.09% (75% LTV), but there is a high 7% fee.

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15 November: Lenders Energised By Inflation Falling To 4.6%

HSBC is offering a five-year fixed rate for home purchase at 4.59% following rate reductions of up to 0.36 percentage points on its fixed home loans.

The new rates and deals, available through brokers, includes a five-year fixed rate for remortgage at 4.84%. Both this deal and the purchase rate at 4.59% are for borrowers with at least 40% equity or deposit (60% loan to value) and each has a £999 fee.

Yesterday Halifax Intermediaries cut rates to offer a market-leading five-year fixed rate for purchase at 4.53%. Virgin Money also cut rates and is offering the lowest five-year fix for remortgage at 4.7%.

Brokers expect the mortgage price war will intensify in the remaining weeks of the year, fuelled by the fall in inflation recorded today by the Office for National Statistics.

Lower inflation means the Bank of England is less likely to increase the Bank Rate (currently at 5.25%) any further. Lenders could see this as an opportunity to grab greater market share with lower rates, boosting business in the run up to the New Year.

David Hollingworth, associate director at L&C Mortgages says: “Better-than-expected inflation data should help underpin the improvements in rate outlook that have already seen fixed mortgage rates dropping.

“Two-year fixed rates have edged below 5% in the last couple of weeks, with major players like Halifax and HSBC joining the leading pack. Five year rates are nudging closer to 4.50% and could dip below that mark in coming weeks. I’d expect to see more lenders following the more sharply-priced competition, and improvements look set to continue.”

Lendco, the specialist buy-to-let lender has cut fixed rates across its range, for new and existing borrowers. Its two-year deals start from 4.66% with a 5% fee and five-year fixed rates start from 5.19% with a 6% fee.

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14 November: Halifax, Virgin, First Direct, HSBC Cut Rates

Halifax Intermediaries is making cuts of up to 0.46 percentage points across its fixed mortgage rates for home purchase and is offering a market-leading five-year deal at 4.53%, writes Jo Thornhill.

The deal 4.53% has a £999 fee and is available at 60% LTV. The lender has also made cuts to purchase deals, through brokers, for first-time buyers and across its new build, larger loans and shared equity and shared ownership scheme deals.

Other major mortgage lenders are sharpening their knives to bring steep cuts to fixed rates as competition hots up once again following this month’s Bank Rate hold by the Bank of England at 5.25%.

Virgin Money has cut selected fixed rates by up to 0.25 percentage points and is offering a market-leading five-year fixed rate for remortgage at 4.7% with a £995 fee (60% loan to value). The deal, on offer through brokers, is available for seven days from today.

Virgin has a purchase exclusive deal, through brokers, at 4.58% with a £1,295 fee (60% LTV) and a five-year fixed rate for remortgage at 4.8% (70% LTV) with a £995 fee.

First Direct has announced its biggest price drop for fixed rates in nine months with reductions of up to 0.4 percentage points for new and existing customers. It is offering a five-year fixed rate for purchase or remortgage at 4.74% (60% LTV) with a £490 fee.

First Direct deals are not available through brokers.

The online bank’s two-year fixed rates now start from 5.09%, while three-year rates start from 4.99%, also with a £490 fee.

HSBC has given notice to brokers of its intention to cut fixed rates across residential and buy-to-let deals from tomorrow morning (15 November).

The Mortgage Works, the specialist buy-to-let lender of Nationwide building society, is cutting selected fixed rates by up to 0.3 percentage points from tomorrow (15 November). Among the new deals it will offer a two-year fixed rate for BTL purchase or remortgage at 4.34% with a 3% fee. This deal is available up to 65% loan to value. Five-year fixed rates start from 4.49%.

Mortgage broker Nick Mendes at John Charcol, says: “We could see five-year residential mortgage rates breach the 4.5% mark, possibly within the next fortnight.”

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9 November: Buy-To-Let Borrowers Also Benefit

More lenders are cutting fixed rate mortgage costs, following the lead of big-name lenders including Nationwide, HSBC, Virgin Money and NatWest, who have reduced rates this week, writes Jo Thornhill (see stories below).

Reliance Bank has cut rates on its mortgages for key workers (see below) by up to 1.09 percentage points. Among the highlights it is offering a two-year fixed rate for home purchase at 4.99% (75% loan to value) with a £1,499 fee and a fee-free two-year fix for borrowers with 10% deposit at 5.7%.

Key workers here include NHS workers, police, fire fighters, social workers, charity workers, teachers, prison staff, pharmacists and dentists, as well as employees of the Salvation Army, which runs Reliance Bank.

Metro Bank has cut rates across its residential and BTL mortgage deals for new and existing customers by up to 0.7 percentage points. It has a BTL two-year fixed rate at 4.79% with a 4% fee, five-year BTL rates start from 4.99% (60% LTV). It is offering a residential remortgage five-year fixed rate at 5.89% (90% LTV) with a £999 fee.

Accord Mortgages is cutting selected buy-to-let fixed rate mortgages by up to 0.3 percentage points from tomorrow (10 November). It is offering a two-year fixed rate at 5.24% (60% LTV) for BTL purchase. It has a £1,995 fee and £500 cashback. It has a five-year fix for remortgage at 4.99% with a £995 fee (60% LTV) or an equivalent deal at 75% LTV at 5.29%.

Landbay has cut its buy-to-let fixed rates by up to 0.3 percentage points. It last made rate cuts on 1 November. It is now offering a two-year fixed rate at 4.39%, albeit with a 6% fee and at 55% loan to value. Other highlights include a five-year fixed rate at 5.05% (75% LTV), also with a 6% fee.

LendInvest, the specialist BTL lender, has cut selected rates by up to 0.6 percentage points. Rates start from 4.19% for a two-year fix on its standard BTL product. This deal has a 7% fee and is available at 75% loan to value.

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8 November: Nationwide Steals Top Slot At 4.64%

HSBC has unveiled its new fixed rate mortgage deals following its latest price cut, including a five-year rate for residential home purchase at 4.69%, writes Jo Thornhill.

The deal, available through brokers, has a £999 fee and requires at least a 40% deposit towards the purchase.

But it comes as Nationwide building society has announced it is cutting fixed rates across its range by as much as 0.38 percentage points from tomorrow (9 November). And among its new deals it will offer a five-year fixed rate for home purchase at 4.64%, which will catapult it back to market-leader in this sector.

The mutual’s best-buy deal has a £999 fee and is available to home buyers with at least 40% deposit to put down towards their new home.

Santander is already offering an equivalent product at 4.65%. Brokers say the latest reductions by HSBC and Nationwide may prompt the Spanish-owned bank to review its rate and reprice downwards.

Among its other new rates HSBC is offering a two-year fix for residential remortgage at 5.39% for borrowers with 25% equity. This is a cut of 0.25 percentage points on the old rate. There is a £999 fee.

The bank also slashed buy-to-let mortgage rates for purchase and remortgage customers. Its two-year fixed rate BTL remortgage deal at 75% loan to value is cut by 0.2 percentage points to 5.94%. Unusually for a BTL deal, there is no fee.

Nationwide’s rate cuts mean it will now offer a three-year fixed rate for residential remortgage at 5.08% (60% LTV) with a £999 fee and a five-year fix, also for remortgage, at 5.34% (85% LTV) with a £999 fee. It will also cut product switcher deals, for existing borrowers, by up to 0.25 percentage points.

Buy-to-let lender BM Solutions, part of Lloyds Banking Group, is cutting fixed rates across its range from tomorrow (9 November). Among the highlights it is offering a five-year fixed rate for BTL purchase at 4.65% with a £3,999 fee (65% LTV) and a five-year fixed rate for BTL remortgage at 4.70% with the same fee (also 65% LTV). Five-year fixed rates for remortgage with a smaller £1,499 fee have fallen to 5.01% (65% LTV).

Fleet Mortgages, the specialist BTL lender, has cut its range of five-year fixed rates by up to 0.2 percentage points. It is offering a five-year deal at 5.54% (75% LTV) with a 3% fee and a green mortgage product (for properties with an energy performance certificate EPC rating between A and C) at 5.44%, also with a 3% fee.

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7 November: HSBC, NatWest, TSB Latest To Trim Rates

HSBC is cutting selected residential and buy-to-let fixed rates from tomorrow (8 November), which are likely to take some deals into the best-buy spots.

Among the reductions will be cuts to first-time buyer deals, two-year fixed rates for remortgage at 60% LTV to 75% LTV, buy-to-let rates for purchase and remortgage, as well as product transfer deals for existing residential and BTL customers.

HSBC has also launched a fee-free three-year fixed rate for first-time buyers and home movers at 95% loan to value with £350 cashback. The rate will be unveiled tomorrow.

NatWest is cutting fixed rates for purchase and remortgage, available through brokers, by up to 0.57 percentage points from tomorrow (8 November).

The chunkiest cuts will be on two and five-year fixed rates for residential remortgage. Its five-year fix for remortgage starts from 4.89% with a £1,495 fee (60% LTV). Equivalent two-year rates start from 5.22%.

The bank has also taken a knife to buy-to-let rates, first-time buyer rates, shared equity deals and product transfer rates for existing customers. Its Help To Buy shared equity five-year fixed rate for remortgage is now 5.09% (75% LTV) with a £995 fee.

TSB has also announced rate cuts to selected deals available through brokers, effective tomorrow. The lender’s two- and five-year fixed rates for buy-to-let purchase and remortgage are cut by up to 0.3 percentage points. Five-year rates will start from 5.09% (down from 5.39%) with a £1,995 fee (60% LTV).

The bank will also launch a two-year fixed rate for purchase at 5.69%, available up to 90% loan to value. There is a £995 fee but borrowers get £500 cashback on completion.

Mortgage broker Nick Mendes at John Charcol says: “Following recent repricing from Virgin Money and Halifax [see below], HSBC and TSB have acted quickly with further repricing. The latest cut from HSBC is likely to see it secure its position among the best buys.”

Coventry building society is offering a near market-leading five-year fixed rate for remortgages with its latest rate cut of up to 0.36 percentage points across selected deals.

The mutual, which unveiled its latest deals available through brokers this morning, has a five-year fixed rate for new customers for purchase or remortgage at 4.86% with a £999 fee. Borrowers need at least 35% deposit or equity to be eligible.

The rate comes close to the current market leading deal, available from Virgin Money at 4.85% with a £995 fee, although borrowers with Virgin need at least 40% equity to bag this rate.

Among other highlights, Coventry is offering a fee-free two-year fixed rate for purchase and remortgage at 5.58% (also 65% loan to value). It also has a two-year fixed-rate first time buyer deal at 6.39% (95% LTV) with no arrangement fee and £500 cashback on completion.

Virgin Money has announced rate cuts to selected residential purchase deals as well as a range of its buy-to-let rates for purchase and remortgage.

Residential purchase rates are tweaked down by up to 0.08 percentage points. It is offering a purchase deal, exclusively through brokers, at 4.91% with a £1,295 fee (65% LTV).

Virgin’s buy-to-let exclusives for remortgage and purchase are cut by 0.1 percentage points and start from 4.96% (65% LTV) with a £2,195 fee.

Keystone Property Finance, the specialist buy-to-let lender, has cut selected two-year fixed rates by 0.1 percentage points. Rates start from 4.84% (65% LTV) with a 5.5% fee.

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6 November: Bank Boosts Competitive Standing

Halifax Intermediaries, which offers mortgage deals exclusively through brokers, is cutting selected two- and five-year fixed rates for purchase and remortgage from tomorrow, 7 November.

Among the highlights is a five-year fixed rate for remortgage at 4.97% with a £999 fee (60% LTV), although this rate is higher than the bank’s equivalent five-year fix for home purchase, which was cut to 4.73% last month.

The lender’s two-year fixed rate remortgage deals have also had a haircut. The rate at 60% LTV with a £999 fee is now 5.25%.

Two- and five-year fixed rates for larger loans (£1 million to £5 million) have also been cut at 60% and 75% loan to value. Five-year fixed rates in this sector now start from 5.22% with a £1,499 fee.

Selected shared ownership and First Homes scheme deals, as well as green mortgages (loans for the most energy efficient homes) will also be reduced from tomorrow.

Nick Mendes at broker John Charcol, said: “It’s positive to see Halifax introduce another round of repricing. The lender had been a little off the pace on its remortgage pricing, compared to Nationwide, HSBC, Coventry, and Virgin Money, for example.

“But still its remortgage rates have not dropped as low as its rates for home purchase, which is a shame.”

3 November: Lenders Prepare Ground For 2024

More lenders are cutting the cost of borrowing in the wake of yesterday’s decision by the Bank of England to freeze the Bank Rate at 5.25% for the second time in a row.

Coventry building society was quick out of the traps, announcing reductions across its fixed-rate mortgage deals for new and existing customers from Tuesday next week (7 November).

Riz Malik, founder of broker R3 Mortgages, says the Bank Rate freeze is good news for mortgage holders, introducing more stability into the market. He expects it will lead to more reductions to fixed mortgage rates, although he predicts cuts will be gradual rather than abrupt: “With 2024 approaching, lenders will want to start the year strong and will want to enter the new year with a good pipeline of business.

“Those likely to benefit the most will be borrowing at lower loan to values [with larger deposits relative to the purchase price] as lenders will still be keeping a keen eye on risk.”

Coventry has cut its two, three and five-year fixed rates, available through brokers, for new residential borrowers, while two and five-year offset mortgage rates have been lowered. Its product transfer deals for existing residential customers will also be shaved to offer lower rates on two and five-year fixes and offset loans.

At the same time the mutual lender has said it will cut all fixed rates for new and existing buy-to-let borrowers.

Leeds building society has cut selected two-year fixed rates for residential borrowers by up to 0.5 percentage points. It is offering a two-year fixed rate at 5.23% with a £999 fee at 75% loan to value. Selected product transfer fixed rates are also reduced by up to 0.45 percentage points

MPowered has cut selected two and three-year fixed rates by up to 0.2 percentage points. Among the new rates is it offering a two-year fix for remortgage at 5.61% with a £999 fee

Atom Bank, the app only lender, has cut fixed rates across its range for borrowers with prime and near-prime credit ratings by up to 0.2 percentage points. It is offering a five-year fix at 5.14% (60% LTV) and a two-year fix at 5.59%, both deals have a £900 fee

Keystone Property Finance, the specialist BTL lender, has cut all five-year fixed rates by 0.2 percentage points and reduced two-year product transfer deals and Switch & Fix rates by 0.15 percentage points. Five-year standard BLT fixed rates now start from 5.24% (65% LTV) with a 7% fee

Platform, part of Co-operative Bank, has cut selected residential product transfer fixed rates by up to 0.2 percentage points. The deals, available through brokers to existing Platform borrowers, start from 4.87% for a five-year fix with a £1,249 fee at 60% LTV. Equivalent three-year fixed rates start from 5.19%.

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1 November: HSBC Revises Rates Downwards

HSBC is cutting selected residential and buy-to-let fixed rates across its range for new and existing customers, writes Jo Thornhill.

The move comes ahead of the Bank of England’s latest Bank Rate announcement, due at 12pm tomorrow (Thursday). Forecasters are predicting that the rate, which influences what lenders charge their customers, will be held at 5.25%.

HSBC’s five-year fixed rate for home purchase (60% LTV) is down by 0.19 percentage points to 4.84% with a £999 fee. Rival Santander is offering the market-leading rate in this category at 4.64% with a £999 fee.

The three and 10-year fixed rates for remortgage at HSBC have been cut by up to 0.45 percentage points. The three-year deal is now at 5.69% (60% LTV) with a £999 fee, for example.

Among its buy-to-let rate changes, HSBC is offering a five-year fixed rate for remortgage (60% LTV) at 5.02% with a £1,999 fee.

Barclays is reducing the rates on its fixed rate deals for home purchase by up to 0.26 percentage points. It is offering two-year fixed rates for purchase from 5.1% (60% LTV) with an £899 fee and an equivalent deal for Premier banking customers at 5.07%. Among its other new rates is a five-year fix at 5.17% (85% LTV), also with an £899 fee.

NatWest has reduced a broad range of its fixed rate deals for new and existing customers. Its residential fixed rates are cut by up to 0.27 percentage points, while buy-to-let rates are slashed by up to 0.4 percentage points. Product switcher rates, deals for existing customers looking for a new rate, are also cut by up to 0.2 percentage points on residential deals and 0.33 percentage points for BTL.

Among its new rates NatWest will offer a five-year fixed rate for home purchase at 4.66% for borrowers with at least a 40% cash deposit. It has an arrangement fee of £1,495.

But the bank’s fixed rate remortgage deals are less competitive, even after the latest rate cut, starting from 5.53% for two-year fixes and 5.1% over five years. Both deals have a £1,495 fee.

Halifax Intermediaries has reduced selected fixed rates on its bespoke product transfer deals for existing customers. At the same time the lender has cut rates for new build home purchase at 95% loan to value. The deals, with no fee, will start from 6.57% for a two-year fixed rate

Landbay, the specialist buy-to-let lender, has cut selected fixed rates by up to 0.2 percentage points. Among its new rates, the lender is offering a two-year fix for standard BTL landlords at 4.89% (75% LTV) with a 6% fee. For landlords of houses of multiple occupancy Landbay has a five-year fixed rates at 5.05% also with a 6% fee.

Scottish Widows Bank, the lending brand owned by Lloyds Banking Group, is pulling out of the residential mortgage market on 17 November.

It will no longer offer purchase or remortgage deals for new customers. Any applications submitted by brokers up to Thursday 16 November will be accepted as normal.

Existing customers will continue with their mortgage deals through Scottish Widows and will be offered the full range of the brand’s mortgage services, including porting (where you can move house and take your existing mortgage with you) and product transfer deals through brokers.

Scottish Widows had been one of the few lenders to offer offset mortgage deals to customers. Offset loans allow you to ‘offset’ cash savings against your mortgage debt so you only pay interest on the balance, reducing the amount you have to pay.

Remaining offset loan providers include Accord, part of Yorkshire building society, Barclays, Coventry building society, Family building society and First Direct.

David Hollingworth at broker London & Country Mortgages, says: “It’s a shame to see this withdrawal from the mainstream market. Scottish Widows Bank has always been able to serve some important niche areas and has built a strong reputation as having the ability to understand and be flexible for young professionals, for example.

“Notably it (Scottish Widows) is the only Lloyds Banking Group brand that offered offset mortgages and that looks set to leave a gap in its proposition unless another brand can pick up the offset baton.

“This marks a reduced choice for borrowers from what has, in the past, been an innovative lender that could bring a more individual approach.”

SWB says it will now focus on its lifetime mortgage product. The bank says its lifetime mortgage deals are unchanged and new business applications can be submitted as normal.

Lifetime mortgages are loans secured against your home that are taken out in later life as a way of releasing equity (cash) out of a property, typically to boost retirement income.

30 October: Heat Goes Out Of Buy-To-Let Sector

Skipton building society has renamed its joint borrower sole proprietor (JBSP) mortgage offers as ‘income booster’ deals in a bid to simplify mortgage jargon for first-time buyers.

Skipton research found first-time buyers feel they have limited opportunities to get on the property ladder as they don’t understand how some mortgage deals work.

The income booster scheme enables home buyers to add up to three people to their mortgage without them becoming owners of the property. The income of these joint borrowers can be taken into account when calculating the size of the loan, which can enable a first-time buyer to borrow more.

The latest data from the Bank of England shows the mortgage and housing market to have dramatically slowed.

Mortgage approvals in September for house purchase slumped to their lowest level (43,300) since January 2023 and net approvals for remortgaging (which only includes remortgaging to a different lender) fell in the same month to their lowest level for more than 20 years.

Net approvals were at 20,600 in September, the lowest figure seen since January 1999.

This suggests that the obligation on lenders to assess whether new customers can realistically afford a loan is encouraging more borrowers to stick with their existing lender, where no such test is required, when they come to the end of an existing deal.

Existing lender product transfer and switcher deals also tend to have lower or no arrangement fees.

The Mortgage Works, part of Nationwide building society, is cutting selected fixed buy-to-let mortgage rates by up to 0.5 percentage points. Among its new deals, the lender is offering a two-year fixed rate deal for purchase or remortgage at 4.49% with a 3% fee (65% loan to value). Five-year fixed rates, also for purchase or remortgage, start from 4.99% with a £1,495 fee (55% LTV) and three year rates (product transfer only for existing customers) start from 4.84% with a 3% fee (65% LTV).

Accord, part of Yorkshire building society, is cutting selected BTL fixed rate deals by up to 0.4 percentage points, effective from tomorrow (31 October). It is offering a two-year fixed rates for remortgage at 5.54% with a £1,995 fee (60% LTV), a three-year rate at 5.49% with a £995 fee (60% LTV) and a five-year fix at 5.34% with a £995 fee (65% LTV). The lender will also cut fixed BTL rates on product transfer deals for existing customers from Wednesday (1 November) by up to 0.25 percentage points.

Leeds building society has also announced rate cuts to selected BTL products for new and existing customers. Loans for BTL remortgage for new and existing borrowers with at least 40% equity have been cut by up to 0.15 percentage points. The cuts apply to standard BTL and deals for portfolio landlords with multiple properties. The five-year fix for purchase or remortgage at 60% LTV is now priced at either 5.14% with a £1,999 fee, 5.29% with a £999 fee or 5.44% with no fee.

While buy-to-let lenders continue to slash rates on their mortgage deals, recent research shows more than one in 10 landlords are planning to get out of the investment property market due to higher mortgage costs and increased rules and regulations.

A survey of landlords by property tax consultancy Cornerstone Tax found 15% of landlords are considering selling-up due to rising costs. It follows a report by estate agent Hamptons, that shows landlords are paying £15 billion more in interest annually as a result of higher mortgage costs.

This is a 40% increase (£4.3 billion more per year) on 2022.

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26 October: Lenders Hopeful Of Bank Rate Hold Next Month

Accord, part of Yorkshire building society, has announced rate increases across a number of its residential fixed rate deals.

It is the first lender to increase fixed rates in many weeks as mortgage providers have generally drawn confidence from falling wholesale money market ‘swap’ rates and the prevailing view that the Bank of England Bank’s Rate is at or close to its peak.

Swap rates are the interbank interest rates at which banks lend to each other, they are widely used by lenders as a guide for pricing fixed rate mortgage deals. The next Bank Rate announcement is on 2 November.

Accord is changing the rates across its Deposit Unlock mortgage deals (these are mortgages at 95% loan to value for new-build properties). Accord offers a range of options under the scheme, including fee-free deals.

The five-year fixed rates have been increased by 0.12 percentage points to 5.76% with a £495 fee or 5.85% with no fee. However, two-year fixed rates have been cut by up to 0.08 percentage points. The lender will offer a deal at 6.5% with a £995 fee, for example.

Accord is also increasing its 10-year fixed rate for residential remortgage customers at 75% loan to value by 0.07 percentage points. The new rate is 5.87% with a £995 fee.

Virgin Money is increasing the rate on its remortgage and purchase Freedom to Fix tracker rate deals by 0.05 percentage points with new two-year deals starting from 5.60% (0.35 percentage points above the Bank of England base rate of 5.25%) at 65% LTV.

However, it is cutting selected residential product transfer deals for existing customers by up to 0.15 percentage points, effective tomorrow (27 October). Five-year fixed rate product transfer deals start from 4.89%.

It has also cut selected buy-to-let purchase and remortgage deals for new customers, available through brokers. Five-year portfolio BTL fixed rates with a 3% fee start from 4.97%.

Virgin will also launch a range of broker exclusive purchase and remortgage deals tomorrow, including a two-year fix with a 1% fee at 5.09% (60% LTV).

TSB also pulled a number of its two-year fixed rates for purchase and remortgage from the market yesterday and has now increased rates by up to 0.2 percentage points.

The bank’s two-year fixed rate for home purchase at 60% loan to value has gone up from 5.09% to 5.29% with a £995 fee, for example. It had previously been a market leading deal. TSB’s two-year fix for remortgage customers has gone up from 5.24% to 5.44% (up to 75% LTV).

Nick Mendes of broker John Charcol says: “It is Interesting to see 10-year pricing increase from Accord in this latest product refresh.

“Across the market we’ve seen two, three, five, seven and 10-year swap rates all sub-5%, which is encouraging given the Bank of England’s Monetary Policy Committee is meeting next week. Markets have so far remained optimistic of another hold in the base rate.”

Elsewhere in the market, lenders have continued to cut fixed rates, buoyed by falling swap rates and greater market stability.

Coventry building society is cutting selected fixed remortgage and purchase rates for new borrowers, including first-time buyer and offset mortgage deals, from Friday (27 October).

Fixed rates on its product transfer deals for existing customers will also be reduced. At the same time the mutual is cutting buy-to-let fixed rates both for new and existing borrowers. New rates and deals will be unveiled on Friday.

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24 October: Lenders Continue To Compete Across Categories

Santander is cutting residential fixed rates for new and existing customers by up to 0.56 percentage points, effective today.

The Spanish-owned bank, the fourth largest UK mortgage lender, has also reduced fixed rate buy-to-let deals by up to 0.32 percentage points and shaved the rates on all residential tracker deals by 0.1 percentage point.

Tracker mortgages follow the Bank of England Bank Rate, with a margin on top of, say, 1 percentage point – so if the Bank Rate is at 5.25%, a tracker deal might be priced at 6.25%, and if Bank Rate moved to 5%, the tracker would fall to 6%.

Santander is now offering five-year fixed rates for residential remortgage from 4.94% with a £999 fee (60% LTV) and equivalent two-year fixed rates from 5.33%.

Its two-year tracker rate deals now start at 5.59% (tracking at 0.34 percentage points above the Bank of England base rate) with a £999 fee (60% LTV).

For new buy-to-let customers, two-year fixed rates now start from 5.57% with a £1,749 fee, and five-year rates start from 5.04% (both deals at 60% LTV).

At the same time Santander has launched a range of three-year fixed rate deals with no fee, available to new customers and on product transfer deals. Rates start from 5.18% (60% LTV).

Skipton building society has made further cuts to its mortgage rates with reductions across its product range taking effect from 9am today.

Residential, buy-to-let and first-time buyer government scheme products are affected, and there has been a further rate reduction on its Track Record mortgage, which is designed to help renters to access the property market, to 5.89%.

The adjustments include rates coming down by up to 0.22% on 70 residential products, by up to 0.33% on 16 buy-to-let products and by up to 0.30% on 25 government scheme products, which include shared ownership and Lifetime ISA deals.

Principality building society has cut fixed rates for residential and buy-to-let borrowers by up to 0.25 percentage points, effective tomorrow (25 October). Selected residential rates at 75% loan to value up to 90% loan to value have been cut, as well as Help To Buy deals and buy-to-let loans at 60% loan to value. It is offering a two-year fixed rate at 5.35% (75% LTV) with an £895 fee, and a fee-free five-year fixed rate deal at 5.27%

Bank of Ireland is cutting its Bespoke buy-to-let mortgage rates, also from tomorrow. Its two-year fixed rates will start from 5.49% with a £1,995 fee (60% LTV) and equivalent five-year fixed rates will drop to 5.05%

LendInvest has cut fixed rates by up to 0.45 percentage points and reintroduced a five-year fixed rate at 90% loan to value at 6.29%.

19 October: Halifax Leads Clutch Of Lenders Trimming Rates

TSB is cutting selected two and three-year fixed rates for new borrowers by up to 0.5 percentage points as it wades into the ongoing mortgage price war.

The bank, the 10th-biggest mortgage lender, will offer the new rates through brokers from tomorrow (20 October). Two-year and three-year fixed rates for remortgage will start from 5.19% (60% LTV) with a £995 fee, while two-year fixed rates for purchase will start from 5.09% with a £995 fee (60% LTV).

TSB is also cutting fixed rates on its product transfer deals, for existing customers looking for a new rate, and deals for additional borrowing by up to 0.5 percentage points.

A number of other lenders have made changes to their mortgage ranges:

Halifax has launched a range of three-year fixed rate deals for residential remortgage, available through brokers from tomorrow. The deals start from 5.08% with a £999 fee (60% LTV), rising to 5.64% (at 90% LTV), also with a £999 fee.

BM Solutions, the BTL lending arm of Lloyds Banking Group, is cutting its fixed rate buy-to-let mortgage deals from tomorrow. It is offering a fee-free five-year fixed rate for BTL purchase at 5.41% (65% LTV) or a lower rate of 4.89% but with a £3,999 fee. Its two-year remortgage rate for BTL will start from 6.14% (65% LTV) with no arrangement fee (the rate is 5.84% with a £1,499 fee). Its lowest five-year fixed rate for remortage is at 4.89% with a £3,999 fee (65% LTV).

Atom Bank, the app-based lender, has reduced selected fixed rates by up to 0.25 percentage points. It is offering two-year fixed rates from 5.69%, three-year rates from 5.54% and five-year deals from 5.24%, all at 60% LTV and with a £900 fee.

Leeds building society has cut selected BTL rates (for limited company BTL) by up to 0.45 percentage points. Among the new rates it is offering a two-year fixed rate at 5.19% for BTL purchase or remortgage (75% LTV) and a five-year fix at 5.64% (also 75% LTV). Both these deals have a £5,999 fee. For a smaller fee of £1,999 the equivalent rate is 6.59% for two years or 6.09% over five years (also 75% LTV). Higher rates are also available with no set-up fee.

MPowered Mortgages has cut rates on its three-year fixed loans between 75% loan to value and 90%. It is offering a three-year fix for remortgage with a £999 fee at 5.35% (75% LTV).

Vida Homeloans has slashed selected BTL deals by up to 0.7 percentage points and residential rates by up to 0.55 percentage points. It is offering a five-year fixed rate at 5.14% for BTL (75% LTV) with a 6% fee. Residential mortgage deals, which cater for borrowers with non standard credit histories, start from 6.79% for a five-year fixed rate and 7.14% over two-years (65% LTV).

Kent Reliance building society has cut selected fixed rates on its BTL mortgage range. Fixed rate mortgage deals with a 7% fee will see cuts from tomorrow (20 October).

Precise Mortgages is reducing rates across selected residential and BTL products. The new rates and deals will be unveiled tomorrow.

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17 October: Virgin Deal Knocks Halifax Off Top Spot

Virgin Money has cut fixed mortgage rates for new customers by up to 0.19 percentage points, and is offering a market-leading five-year fixed rate for home purchase at 4.71%.

This deal is available for borrowers with at least 35% deposit or equity, and will be on offer through brokers from tomorrow (18 October). There is a £1,295 arrangement fee.

It steals a march on Halifax, which on Friday last week launched a five-year fixed rate for property purchase at 4.73%, which had been the market leader to this point.

At the same time Virgin will offer a five-year fixed rate for remortgage at 4.85% (60% LTV) with a £995 fee. This is also a market-leading rate.

The bank will offer fee-free purchase deals, exclusively through brokers, starting from 4.87% (65% LTV) for a five-year fixed rate.

Selected two-year purchase and remortgage rates have also been cut. Virgin will offer a two-year fix for remortgage at 5.26% (60% LTV) with a £995 fee. Fee-free deals have also been reduced.

Virgin has also cut selected buy-to-let fixed rates and is offering a fix-year deal at 5.31% (75% LTV).

Product transfer deals, for existing customers looking to switch to a new rate, have been cut by up to 0.26 percentage points, with new five-year fixed rate deals starting from 4.89%.

Co-operative Bank has cut selected fixed rates by up to 0.47 percentage points, effective from tomorrow. It is offering a five-year fixed rate deal for purchase and remortgage at 4.92% with a £999 fee and an equivalent deal for larger mortgages (£650,000 minimum loan) at 4.86% with a £1,999 fee. Both deals require a minimum 40% equity or deposit.

The bank is also offering two year fixed rates for purchase or remortgage from 5.1%, three-year rates from 5.09% and five-year rates from 4.92% (all deals are at 60% loan to value with a £999 fee).

Barclays is cutting selected fixed mortgage rates by up to 0.2 percentage points for new customers across its residential and BTL ranges, effective tomorrow (18 October).

Selected product transfer deals are also cut. Among the deals for new customers is a five-year fixed rate at 5.43% (85% LTV) and a fee-free Great Escape five-year fixed rate at 5.65% (also 85% LTV).

The bank’s five-year fix for Premier Banking customers is now at 5.24% (60% LTV) with a £999 fee. Its five-year fee-free Springboard mortgage deal, for first-time buyers at 95% LTV is cut from 6.84% to 6.64%.

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13 October: Deal Has £999 Fee, Requires 40% Deposit

Halifax is slashing its fixed mortgage rates again for new borrowers and will offer a market leading five-year fixed rate for home purchase at 4.73%, writes Jo Thornhill.

The bank’s new deals, available from Monday (16 October) through brokers, include lower rates for first-time buyers, home purchase, larger mortgage loans, new build, shared equity, shared ownership and green home products.

The bank last cut its fixed borrowing rates just over one week ago.

Halifax’s five-year fixed rate for home purchase at 4.73% has a £999 fee and is available to borrowers with a 40% deposit (60% loan to value).

Earlier this week Nationwide building society cut its fixed mortgage rates and is offering a five-year fix for home purchase at 4.74%, also with a £999 fee.

Nick Mendes at broker John Charcol said: “It’s great to see strong competition among lenders with rates getting nudged down like this. It’s possible five-year rates could get even closer to 4.5% by the end of this month, if all else stays stable in the market.”

Halifax will also offer two-year fixed rates for home purchase from 5.24% with a £999 fee (also 60% LTV). Its five-year fixed rates for new build properties are cut and start from 4.93% with a £999 fee (60% LTV), or two-year rates start from 5.44%.

Its shared equity five-year fixed rates start from 4.93% with a £999 fee (60% LTV). The equivalent deal at 95% LTV is 5.91% with a £999 fee.

11 October: Big Lenders Lining-Up Rate Reductions

Nationwide and First Direct have cut fixed borrowing costs as competition rages in the sub-5% mortgage deal sector, writes Jo Thornhill.

Nationwide, the second biggest lender, has cut residential fixed rates for new and existing customers by up to 0.45 percentage points. It is the mutual’s second rate cut in as many weeks.

Among its new deals, available direct and through brokers, Nationwide is offering a five-year fix for home purchase at 4.74% with a £999 fee. This deal is available for those with at least a 40% deposit to put towards the purchase (max 60% loan to value).

Nationwide also has a five-year fixed rate for remortgage (also 60% LTV) at 4.89% with a £999 fee.

First Direct has cut selected two, three and five-year fixed rates for new and existing customers by up to 0.33 percentage points. It is offering a five-year fixed rate for home purchase and remortgage at 4.87% with a £490 fee (60% LTV). This is a market-leading remortgage rate. But First Direct’s mortgage range is only available direct from the bank, not through mortgage brokers.

Coventry building society is cutting selected fixed rates across its range for residential and buy-to-let borrowers from Friday (13 October). The reductions will be applied to all two-year fixed rates for residential home purchase and remortgage, three-year fixed rates at 80% to 85% loan to value, plus five-year fixed rates at 90% LTV. The mutual is withdrawing all tracker rate deals for new and existing customers.

Virgin Money has cut a range of its BTL deals by up to 0.26 percentage points. Among its deals, available through brokers, is a five-year fixed rate for BTL remortgage or purchase at 4.72% with a 3% fee (60% LTV).

The lender has withdrawn a range of broker exclusive purchase and remortgage deals and relaunched with new rates. Its five-year fixed rate for remortgage has gone up from 4.90% to 4.95% for example, but the new deal offers free valuation and £250 cashback.

TSB has cut fixed rates for new residential and BTL customers by up to 0.2 percentage points.

Among its cuts will be a reduction on two-year fixed rates for residential home purchase up to 95% loan to value, and cuts on all three-year fixed rates for purchase and remortgage. Two and five-year fixed rates for BTL remortgage will be cut by up to 0.15 percentage points. The new mortgage rates will be unveiled tomorrow.

Co-operative Bank for Intermediaries has cut fixed rates for residential and buy-to-let borrowers, effective from tomorrow (11 October). The lender, which last month changed its name from Platform, has cut two, three and five-year fixed rates for home purchase and residential remortgage by up to 0.5 percentage points. BTL deals are cut by up to 0.4 percentage points.

West Bromwich building society has cut three-year fixed rate deals by up to 0.3 percentage points. The mutual lender is offering a three-year fix for remortgage at 5.44% for new customers with 25% equity in their property. There is a £999 fee, but also £500 cashback on completion.

Market Harborough building society has cut selected fixed rates by up to 0.35 percentage points. The rate reductions apply across their specialist lending areas, including expat, buy to let and multi-generation.

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9 October: Competition Intensifies Across Product Categories

More lenders have cropped their borrowing rates as competition for new business intensifies, writes Jo Thornhill.

The Mortgage Works, the specialist lender owned by Nationwide building society, has cut selected buy-to-let (BTL), let-to-buy and large portfolio BTL fixed rates by up to 0.75 percentage points.

The reductions, effective tomorrow (10 October), include a five-year fixed rate at 4.84% (55% loan to value) with a 3% fee, and a five-year fix at 5.14% (75% LTV), also with a 3% fee. Both deals are for standard buy-to-let.

Figures published by Moneyfacts show that the number of BTL products has grown almost threefold in a year, to 2,581 this month, compared to 988 in October 2022. This month’s figure is also up from the 2,475 BTL deals available in September.

Aldermore has cut its fixed rate mortgage deals for existing customers looking to switch. The new product switcher rates apply on residential deals as well as buy-to-let (BTL).

The lender’s two-year fixed rate for residential mortgage customers looking to switch to a new deal now starts from 6.24% (65% LTV). Standard (single residential) BTL two-year fixed rates start from 6.99% (70% LTV). There are no fees for existing customers on these deals.

Bath building society has cut fixed rates across its range for residential and BTL mortgage borrowers and also cut the cost of a range of discounted rate deals. The mutual is offering a two-year fixed rate at 6.04% (80% LTV) and an equivalent five-year rate at 5.64%.

Mpowered Mortgages has cut rates on its three-year fixed rate mortgage deals up to 90% LTV. Among the new deals it is offering a fee-free three-year fix for home purchase, through brokers, at 5.79% and a three-year fix for remortgage at 5.4% with a £999 fee.

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9 October: Mutual Acts In Line With Mortgage Charter

Skipton building society has launched a range of low two-year fixed rate mortgage deals starting at 3.35%, for existing customers who are at risk of hitting payment difficulties due to higher borrowing rates, writes Jo Thornhill.

It says this move is an extension of its commitment to the Mortgage Charter, which was established by the Financial Conduct Authority, the market regulator, earlier this year. The Charter lays out standards which all lenders must stick to when dealing with borrowers in financial difficulties.

Existing Skipton mortgage customers who know they’re going to struggle with payments at higher mortgage rates, can opt for the low rate deal, which is a two-year fixed rate. But the downside is a charge of 5% of the existing loan amount, which can be added to the mortgage debt.

It means that, while borrowers will have lower monthly payments in the short term, they will be paying off more debt over the duration of their mortgage, so they’re likely to pay more interest overall.

Skipton is offering a two-year fixed rate at 3.35%, this is for borrowers with at least 40% equity in their property (60% loan to value ratio). The rate then rises to 3.39% for borrowers with 25% equity. Borrowers with 15% equity can get a rate at 3.49%, and those with just 10% equity can get a rate at 3.59%.

The rates are significantly lower than the average two-year fixed residential mortgage rates on offer on the open market. The current average rate is 6.41%, according to Moneyfacts, while the average five-year fixed rate is 5.96%.

The Mortgage Charter states that lenders must enable a borrower to opt to pay interest-only payments or extend their mortgage term for up to six months, to bring down monthly costs.

Nick Mendes, mortgage technical manager at broker John Charcol, says: “While Skipton’s headline line rate of 3.35% in the current market might seem great, the 5% arrangement fee will likely outweigh any benefits when choosing this deal over a competitor.

“This will suit some of Skipton’s existing mortgage holders, in particular those who have a small amount of debt outstanding.”

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5 October: HSBC Follows Virgin’s Market-Leading 4.82% Offer

HSBC, the sixth largest mortgage lender, has unveiled its new fixed-rate deals, including a five-year fixed rate for home purchase at 4.84% and a five-year fix for remortgage at 4.98%, writes Jo Thornhill.

The bank’s latest five-year fixed rate deal for home purchase, which requires a 40% cash deposit, comes close to pipping Virgin Money’s market-leading deal for home buyers, which is only available through brokers at 4.82%.

HSBC’s arrangement fee is lower at £999, compared to £1,295 with Virgin.

Virgin Money’s 4.82% deal is available for borrowers with up to a 25% deposit (75% LTV). But it is only available for seven days, starting yesterday, and may be withdrawn earlier according to demand.

Among HSBC’s other new deals revealed today is a five-year fixed rate for first-time buyers with a 10% cash deposit at 5.29% with a £999 fee, and a five-year fixed rate for remortgage customers with up to 25% equity in their home at 5.05% with a £999 fee.

Nick Mendes at broker John Charcol says the mortgage price war is great news for borrowers looking for a new deal as rates continue to inch downwards: “While some of the biggest lenders fight it out to be top of the rate table, a number of big banks have yet to break into the sub-5% club, including Barclays and TSB, so we’ll wait to see if they decide to get involved in the latest rate war.

“I have some hope now that we could see five-year rates dip even as low as 4.7% later this month.”

4 October: Competitive ‘Fire Sale’ Drives Down Rates

Virgin Money is cutting residential fixed rates for new and existing customers by up to 0.29 percentage points and is launching a market-leading five-year remortgage fixed rate at 4.9%.

The move comes hot on the heels of the launch of a five-year fixed rate deal for remortgage by HSBC subsidiary First Direct at 4.92%.

HSBC itself will be announcing cuts across its mortgage range tomorrow.

Virgin’s deal, exclusively through brokers, has a £995 fee and is available at 60% loan to value. But it will only be available for seven days.

In contrast, First Direct’s deal, which has a £490 fee and is also for loans at 60% LTV, is not available through brokers as First Direct is a direct-only lender.

Nick Mendes at broker John Charcol says: “It has been a while since we’ve seen a temporary rates fire sale, but these latest deals from Virgin Money at 4.90% on a five-year fix will put it in pole position for remortgage rates – albeit for a limited seven days. This doesn’t include rates for existing clients through a product transfer or a further advance.

“Mortgage holders have seven days to secure a deal at this rate before it is pulled from the market, and I suspect if Virgin receives more applicants than it anticipated then the time frame could be even shorter.”

Virgin has also cut rates for home purchase with fee-free five-year fixed rate deals starting from 5.04% (65% LTV). Selected product transfer deals (rates for existing customers looking for a new deal) have also been cut.

First Direct has cut all two, three and five-year fixed rates for new and existing customers (product transfer or switcher deals) by up to 0.2 percentage points.

Its three-year fixed rates start from 5.46%, while two-year fixed rates now start from 5.51% and 10-year fixed rates start from 5.12%. These rates are at 60% LTV.

Halifax has cut selected fixed rate deals, including rates for residential purchase, first-time buyers, shared ownership, new build and large loans. Among the new deals, available through brokers from Friday (6 October) is a five-year fixed rate for home buyers at 4.85% (up to 75% loan to value) with a £999 fee. Two-year deals for purchase start from 5.32%.

Skipton building society has cut residential fixed rates across its range by up to 0.49 percentage points, effective today. Its 100% loan to value Track Record mortgage deal for first-time buyers has been cut from 6.19% to 5.94%. Track Record is a five-year fixed rate with no arrangement fee.

The mutual has also cut its popular two- and five-year fixed rate deals for remortgage, with rates now on offer from 5.66% and 4.99% respectively, with a £1,495 fee on the two-year deal and a £2,995 fee for the five-year sub-5% rate.

Nationwide building society has increased its maximum loan to value ratio for self-employed borrowers looking to purchase a home (home mover or first-time buyer) to 95%. Previously the maximum LTV was 85%. The maximum LTV for remortgage for self-employed homeowners is 90% with Nationwide.

At the same time, Nationwide has increased the amount that self-employed applicants can borrow. The maximum loan to Income ratio is rising to 5.5 times income, up from 4.49 times.

Coventry building society is cutting selected residential fixed rate deals for new and existing borrowers from Thursday (5 October). All BTL fixed rates will also be cut. The new deals, available through brokers, are expected to be in line with competitors including Nationwide, Virgin and HSBC, who have all cut five-year fixed rate deals to under 5%.

LendInvest Mortgages has cut residential fixed rates by up to 0.45 percentage points and reintroduced deals at 90% loan to value. The lender, which caters for borrowers who don’t meet mainstream lender criteria, is offering two-year fixed rates starting from 6.44% with a £995 fee and five-year rates starting from 6.34% with a £1,195 fee (both deals are 70% LTV). Its rates at 90% LTV start from 7.44% with a £1,195 fee.

Accord Mortgages, part of Yorkshire building society group, has cut fixed rates across its buy-to-let range by up to 0.46 percentage points. Among its new deals, available from tomorrow (4 October) is a two-year deal for property purchase at 5.64% for BTL purchase (60% LTV) with a £1,995 fee. Equivalent five-year rates now start from 5.24%.

Specialist buy-to-let lender Fleet Mortgages has cut two and five-year fixed rate deals for new borrowers, following a range of rate cuts last week. Among its deals the lender is offering standard BTL five-year fixed rates from 5.34% (70% LTV) with a 5% fee.

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2 October: Borrowers Benefit From Optimism On Rate Prospects

Nationwide building society has cut its two- and five-year fixed rates for remortgage and will offer a market-leading five-year deal for new customers, effective from tomorrow (3 October), writes Jo Thornhill.

The mutual, the second largest lender, last cut fixed rates on 22 September and at that time it launched a sub-5% five-year fixed rate for home purchase.

The new remortgage deal will be available at 4.99% with a £999 fee, for borrowers with 40% equity in their property (60% loan to value).

It is among the cheapest fixed rates for remortgage. Other lenders are offering sub-5% rates, but they are primarily for home purchase or have higher fees attached.

Nationwide has also cut two-year fixed rates for remortgage, with deals starting from 5.49% (also at 60% LTV).

At the same time the mutual has made cuts to a range of its fee-free tracker deals for first-time buyers, home purchase and remortgage. It is offering a two-year tracker deal for remortgage (60% LTV) at 0.74 percentage points above the Bank of England Bank Rate. It means the starting pay rate is 5.99%.

Nick Mendes, mortgage technical manager at broker John Charcol, says: “Nationwide has laid down the gauntlet with its latest market-leading remortgage deal, further strengthening its hold in the market. It will be interesting to see if there is a quick response from other lenders.”

TSB has cut residential fixed rates for new and existing customers by up to 0.3 percentage points and is offering a five-year fixed rate deal for purchase at 4.89%, effective from tomorrow (3 October). More details on this sub-5% rate will be available tomorrow.

The bank’s new rates include reductions to product transfer deals (rates for existing customers looking for a new deal) and rates for additional borrowing.

Leeds building society has cut fixed rates on its product transfer range by up to 0.16 percentage points. It is also extending the end dates out to January on a range of its products, including buy-to-let, holiday let, right to buy and shared ownership deals for new and existing customers.

Specialist buy-to-let lender Landbay has cut fixed rates and will offer sub-5% fixed rates among its product range. It has a two-year fixed rate (65% LTV) for standard BTL remortgage at 4.84%, with a 6% arrangement fee.

29 September: Lenders Trying To Inject Life Into Market

Yorkshire building society has nudged down the cost of its sub-5% five-year fixed rate deal for purchase and remortgage from 4.99% to 4.92% as part of a wider set of cuts across its range, as the mortgage rate war continues.

The mutual was one of the first to break the 5% rate barrier when it launched a five-year fixed rate on 18 September. A number of other lenders, including Nationwide, Virgin Money, Santander and NatWest, have all cut five-year fixed rates to below 5%.

Yorkshire’s new 4.92% five-year fix is available up to 75% loan to value (LTV) and has a £1,495 fee.

Among its other new deals, Yorkshire is offering a two-year fixed rate for home purchase at 5.64% with a £495 fee (also 75% LTV). It offers a free standard valuation and £250 cashback.

A number of other lenders have repriced their mortgage rates downwards:

Co-operative Bank has announced it is cutting five-year fixed rates by up to 0.23 percentage points and relaunching its range of deals, available through brokers, for new residential and buy-to-let customers, from Monday (2 October).

Among its new deals Co-op will offer a five-year fixed rate for residential remortgage (at 60% loan to value) at 5.11% with a £1,999 fee.

Scottish Widows, part of Lloyds Banking Group, is cutting five-year fixed rates on product transfer deals and for borrowers wanting a further advance (to borrow more on their mortgage). The cut is also effective from Monday. Five-year fixed rate deals for existing customers looking for a product switch start from 5.69% with a £749 fee.

Newcastle building society has cut rates on selected deals, available through brokers, for buy-to-let customers by up to 0.46 percentage points. Among the new rates is a two-year fix at 6.15% (80% LTV) with a £999 fee, and a five-year fix at 5.99% (also 80% LTV) with no fee.

The Mortgage Works has cut rates on its product transfer range for existing limited company customers by up to 0.35 percentage points, effective tomorrow (30 September). Among the new rates is a five-year fixed rate at 5.39% with a 5% fee (70% LTV).

Newbury building society has unveiled a range of five-year fixed rate deals for buy-to-let borrowers, with rates starting from 5.79% (75% LTV) for landlords of individual residential properties. Limited company BTL borrower rates start from 6.29% and holiday let deals start from 6.69%.

Specialist buy-to-let lender Fleet Mortgages has cut rates on its five-year fixed rate deals by up to 0.2 percentage points. It is offering a five-year deal at 5.34% (70% LTV) with a 5% fee.

Together Mortgages, the BTL Lender, has cut selected deals across its two- and five-year fixed rates for landlords. Five-year fixed rates start from 7.99% with a 2.5% fee. This deal is for remortgage and available up to 70% LTV.

The Bank of England has published the latest figures from its monthly Money and Credit Report, which are a gauge of the health of the housing and mortgage market.

The data shows net borrowing of mortgage debt increased in August by £1.2 billion, up from £0.2 billion in July. But mortgage approvals for house purchase fell from 49,500 in July to 45,400 in August. This is the lowest level in six months.

Net approvals for remortgage also fell from 39,300 in July to 25,000 in August, the lowest level since 2012.

This data only captures remortgages to new lenders, so the fall in numbers could be a reflection of a growing trend of borrowers switching to a new deal with their existing lender.

This is known as a product transfer, and could be more popular during the cost of living crisis as there are usually low or no fees to switch and the lender does not carry out a new affordability assessment.

The ‘effective’ interest rate (the actual interest rate paid by borrowers) on new mortgages was 4.82% in August, according to the Bank of England. This is a 0.16 percentage point increase on the previous month.

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28 September: Market Continues To Respond To Bank Rate Hold

Two more major lenders – Halifax and Barclays – are cutting the cost of borrowing following a flurry of rate drops across the market since the Bank of England froze its Bank Rate a week ago.

Halifax, part of Lloyds Banking Group, has cut selected fixed rates for purchase and remortgage by up to 0.36 percentage points. It has also joined the ranks of lenders offering deals at under 5%.

Its new deals, available from Monday (2 October) through brokers, include a five-year fixed rate for home purchase at 4.93% (60% LTV) with a £999 fee. Two-year purchase rates start from 5.44%.

Its two and five-year fixed rates for remortgage customers will start from 5.63% and 5.16% respectively. Both have a £999 fee and are available to borrowers with 40% equity in their home.

Barclays has also announced rate cuts to selected fixed and tracker rate deals for residential and buy-to-let borrowers from tomorrow (29 September). But it has not dipped below the 5% rate barrier, despite many of its big competitors, including Halifax, Nationwide, Santander and Virgin Money, offering five-year fixed rate deals at under 5%.

It is offering a two-year fixed rate for remortgage at 5.28% with a £999 fee (60% LTV) and a five-year fixed rate for purchase and remortgage at 5.14% with a £1,999 fee (also 60% LTV).

A number of smaller lenders have also made cuts to their mortgage fixed rates:

BM Solutions, part of Lloyds Banking Group, will be making rate cuts across its buy-to-let range from 2 October. Five-year fixed remortgage rates will start from 5.34% with a £1,499 fee (65% LTV)
Clydesdale Bank, part of Virgin Money group, is reducing selected fixed rates from 29 September by up to 0.25 percentage points for new and existing customers looking for a new deal. Among its offerings are loans for professionals and newly qualified professionals including a five-year fix at 5.65% (75% LTV)
Paragon Bank has launched a competitive five-year fixed rate deal for buy-to-let borrowers at 4.69% (70% LTV) as part of a wider range of cuts to its mortgage rates. There is a 7% fee and the deal is available for single self-contained properties with energy performance certificate ratings of A to C
MPowered Mortgages is cutting selected deals by up to 0.25 percentage points. It has also launched a fee-free three-year fixed rate for remortgage at 5.69%
Atom Bank has cut rates by up to 0.2 percentage points across a range of products. It is offering a five-year fixed rate for remortgage at 5.29% (60% LTV) with a £900 fee
Specialist lender Pepper Money has cut the cost of borrowing across its entire range. The biggest cuts (up to 2.25 percentage points) have been made on deals for borrowers with adverse credit. It is offering a two-year fixed rate for so-called ‘light’ adverse credit borrowers at 7.85% (75% LTV). The Pepper 24 Bankruptcy two-year fixed rate deal has been cut to 8.44%. Completion fees are £1,495.

27 September: Lenders Eager To Compete For Business

NatWest is the latest lender to offer a sub-5% mortgage as part of a number of cuts to its fixed-rate range, effective tomorrow (28 September).

Following rate reductions by Virgin and HSBC, who are both offering fixed rates to new borrowers at below 5% (see story below), as well as a clutch of other lenders, NatWest has unveiled a five-year fixed-rate for home purchase at 4.89% with a £1,495 fee. It’s available for borrowers with at least a 40% deposit towards their purchase.

The bank, the third largest mortgage lender, has also slashed rates on two and five-year fixed-rate remortgage deals by 0.17 percentage points and 0.24 percentage points respectively. Its five-year fixed remortgage rate at 60% LTV will now start from 5.15% with a £1,495 fee.

Rates for first-time buyers, shared equity loans and Help to Buy shared equity remortgage deals have also been shaved, along with green mortgage rates (for energy efficient homes) and product switcher deals, for existing customers taking a new deal.

Nick Mendes at broker John Charcol said the escalating price war is great news for borrowers searching for a mortgage deal: “NatWest is following hot on the heels of its competitors, Nationwide, Santander, HSBC and Virgin, with yet another rate reduction. It becomes just the latest in a growing line of lenders keen to break the 5% rate barrier.”

Among other lenders repricing and adjusting their mortgage range offerings today:

Leeds building society is reducing selected residential fixed rates by up to 0.25 percentage points from tomorrow (28 September) as part of a broader range of mortgage changes, including the withdrawal of deals at 65% loan to value and extending end dates on selected deals. Among the new deals is a five-year fixed rate for remortgage or purchase at 5.25% (85% LTV) with a £999 fee
Principality building society is cutting residential and BTL fixed rates from Sunday (1 October) and reintroducing two-year fixed rates (which it had removed from the market on 20 September). The biggest cuts are seen for 90% LTV deals at 0.86 percentage points. Selected BTL fixed rates will be cut by up to 0.47 percentage points
The Mortgage Works, part of Nationwide building society group, is cutting fixed rates on buy-to-let mortgages for limited companies and homes of multiple occupancy by up to 0.4 percentage points from tomorrow (28 September). It will offer a five-year fixed rate in this sector at 5.44% (70% LTV) with a 5% fee and a five-year fix at 5.69^ (75% LTV) with a 3% fee
Accord, the broker-only lender owned by Yorkshire building society, has increased the maximum loan-to-value ratio on its Cascade Score range. These are deals for new borrowers looking to purchase or remortgage at high loan to values (85% or higher and not for new build property). The range now goes up to 95%.
LendInvest, the specialist BTL lender, has re-entered the five-year fixed rate remortgage market after withdrawing all deals for new customers in August. It has relaunched with a five-year fixed rate for remortgage for landlords with a 25% deposit or equity at 5.89%.

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27 September: Wave Of Cuts Follows Bank Rate Hold

Virgin Money and HSBC have cut selected fixed rates, with new deals including rates at sub-5%, as a price war has broken out, writes Jo Thornhill.

Growing numbers of banks and building societies are taking a knife to their fixed rates, as more lenders draw confidence from last week’s positive news on inflation and the Bank of England Bank Rate freeze.

Virgin Money has cut selected residential purchase and remortgage rates, available through brokers. As mentioned above it is offering a five-year fixed rate for purchase at 4.82% (60% LTV) with a £1,295 fee. Fee-free purchase fixed rates start from 5.09%. The bank is also offering a five-year fixed remortgage deal at 5.38% (70% LTV) with a £999 fee.

At the same time Virgin is cutting BTL rates across its range. It is offering a five-year fixed rate at 60% LTV for BTL purchase or remortgage at 5.27% and a 3% fee. Two-year fixed rates start from 5.17%.

HSBC has cut selected fixed rates for new and existing customers across its residential and buy-to-let ranges. New rates include a five-year fixed rate for home movers at 4.93% with a £999 fee. This is for borrowers with 40% equity or deposit. The bank’s five-year fixed rates for remortgage now start from 5.19% with a £999 fee (also 60% LTV).

The Mortgage Lender, the broker-only lender, has reduced rates on its five-year fixed rate deals for standard buy-to-let borrowers and landlords with houses of multiple occupancy (HMO). Deals now start from 5.91% (75% LTV) with a 3% fee. TML has also launched a new two-year standard BTL fixed rate at 4.69% with a 5% fee. The two-year fix for HMO deals starts from 6.19%, also with a 3% fee.

Specialist BTL lender Landbay has cut rates on two and five-year fixed rates by up to 0.2 percentage points. It is offering fixed rates for HMO properties and multi-unit freehold blocks from 5.04%.

Aldermore, the broker-only lender, has launched a new range of BTL deals for landlords with multiple properties. The new five-year fixed rates start from 5.09% (75% LTV) with a 7% fee.

Katy Eatenton, mortgage expert at Lifetime Group, the mortgage and wealth advisory firm, says: “The downward movement in rates is definitely something we will see more of while lenders are vying for new business in a very quiet market. I would like to think fixed mortgage rates have peaked, but if the last year has proved anything, it is that things can change.”

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25 September: Clutch Of Lenders Respond To Bank Rate Freeze

Santander, plus a host of smaller lenders, have cut fixed mortgage rates for new and existing customers following a freeze to the Bank of England base rate last week, writes Jo Thornhill.

Santander, the fourth largest lender, is cutting fixed rates for new and existing residential and buy-to-let (BTL) customers from tomorrow (26 September). It includes a sub-5% five-year fixed rate for house purchase.

This comes after Nationwide building society caused a stir on Friday last week after it launched a five-year fix for purchases at 4.94%. And Yorkshire building society has also launched a sub-5% deal (4.99%) for purchase and remortgage (see stories below).

Santander’s five-year fix is at 4.95% with a £999 fee and is available to borrowers with a 40% cash deposit to put down towards their home purchase. The bank is also offering two-year fixed rates from 5.43% with a £999 fee (60% LTV).

The bank has also cut rates for BTL and on product transfer deals (for existing customers looking to switch to a new deal).

Bank of Ireland is cutting residential fixed rates for new customers for purchase and remortgage from tomorrow. It is offering two-year fixed rates from 5.39% (with a £1,495 fee) at 75% loan to value, and five-year fixed rates from 4.99% also with a £1,495 fee (75% LTV).

Nottingham building society has cut two-year fixed rates for new residential borrowers by up to 0.23 percentage points. It has also introduced fee-free fixed rates at 75% and 85% loan to value.

Accord, the specialist broker-only lender owned by Yorkshire building society, is cutting selected buy-to-let product transfer rates from tomorrow. It cut selected residential fixed rates on Friday last week. Its two- and three-year BTL rates will be cut by up to 0.3 percentage points, while five-year rates are set to be cut by up to 0.35 percentage points. These are deals available to existing customers only.

Generation Home has announced it is cutting fixed residential rates for new business from tomorrow – it is the lender’s third rate cut in as many weeks. Rates up to 90% loan to value are set to be cut by up to 0.2 percentage points.

Five-year fixed rates (for borrowers who take the homebuying bundle including Gen H Legal’s conveyancing service) are at 5.38% with a £999 fee (up to 80% LTV). Two-year fixed rates (homebuyer bundle) now start from 5.9%.

Specialist BTL lender Keystone Property Finance has cut fixed rates for the second time this month. The lender’s new rates under its Standard range will be live on its website tomorrow morning.

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22 September: More Lenders Expected To Follow Suit

Nationwide building society and TSB have both cut selected residential fixed rates, effective today, with Nationwide offering a five-year fixed-rate deal for purchase at sub-5%, writes Jo Thornhill.

The Bank of England’s freeze on interest rates yesterday appears to have given lenders the confidence to make further cuts to mortgage costs, and brokers are predicting more are likely to follow Nationwide and TSB’s lead today in the downward repricing of fixed rates.

Nationwide, which has made cuts of up to 0.31 percentage points, is offering a five-year fixed rate for new customers purchasing a property at 4.94% with a £999 fee (75% LTV). Its first-time buyer deal at 90% LTV has been cut to 5.38%, also with a £999 fee. Residential remortgage deals now start from 5.7% for a two-year fix or 5.2% over five years (both 60% LTV), with a £999 fee.

TSB has cut selected residential rates for new business by up to 0.25 percentage points. Its two-year fixed rate for home movers is now 5.74% (75% to 80% LTV) with a £995 fee. Five-year fixed rates for home movers now start from 5.09% (60% LTV). The lender’s three-year fixed rates for remortgage have been cut by up to 0.2 percentage points and start from 5.64% (60% LTV) with a £995 fee.

Nick Mendes at broker John Charcol said: “Nationwide and TSB reacted quickly following the Bank of England rate announcement yesterday, in making further fixed rate reductions. Nationwide’s last rate cut was only last week so seeing another repricing so quickly is welcome news. It will be interesting to see which other lenders follow suit.”

Riz Malik at broker R3 Mortgages believes many lenders will draw confidence from yesterday’s rate freeze: “High street lenders will want to capitalise on this recent decision as soon as possible. I expect all the major players will have repriced at least once by early next week.”

Accord, the broker-only lending arm of Yorkshire building society, has cut residential fixed rates, in particular lowering the cost of deals for borrowers with a smaller deposit or equity by up to 0.46 percentage points. It is offering a five-year fix at 95% LTV (under the Deposit Unlock scheme for new build purchase) at 5.64% with a £495 fee. Its five-year fix at 75% LTV is now 5.21% with a £1,495 fee
Mpowered Mortgages has cut residential fixed rate mortgages for new business. Among its range it is offering a two-year fixed rate at 5.66% (60% LTV) for purchase, with a £1,295 fee and a five-year fee-free deal for remortgage at 5.49% (75% LTV).

20 September: State Bank Of India 3.9% Offer Shocks Market

State Bank of India has launched a two-year fixed-rate deal for new buy-to-let customers at 3.9% as the mortgage price war continues to rage, writes Jo Thornhill.

The deal, which requires a 50% cash deposit or equity, has a hefty 5% arrangement fee. But brokers believe it will be a mouth-watering option for many BTL investors.

NatWest is cutting selected residential and buy-to-let (BTL) fixed rates and tracker deals from tomorrow (21 September). It last cut rates on 8 September. For residential remortgages, its two and five-year fixed rates are cut by up to 0.2 percentage points. BTL purchase rates are cut by up to 0.31 percentage points, while remortgage rates are cut by up to 0.21 percentage points. A range of product transfer deals (for existing customers looking for a new rate) will also be reduced. The bank is offering a two-year fix for new remortgage customers at 5.84% (60% LTV) with a £995 fee and a five-year equivalent deal at 5.29%

Commenting on the State Bank of India move, Nick Mendes at broker John Charcol said: “This is a shock rate announcement. It is more than a year since two-year fixed rates were under 4% in the buy-to-let market. No other lender has broken the 4.5% barrier for two-year rates, let alone gone sub-4%.

“It is likely to be a small tranche of money available, so interested borrowers will need to act fast. I can’t see this deal will be sustainable for very long from a cost or service level perspective.”

The move by State Bank of India is part of rate cuts across two and five-year fixed rates for BTL borrowers. It follows a number of lenders who cut five-year fixed rates to under 5% last week for residential borrowers. It is the first time rates have been this low in many months.

Fixed rates have been falling due to falls in ‘swap’ rates, the wholesale interest rates at which banks lend to each other. Swap rates are used by banks to price fixed rate mortgage deals.

It suggests the market believes interest rates are close to their peak for this cycle. The Bank of England Governor Andrew Bailey recently commented that this was likely to be the case, although another rate rise is possible when the Bank’s Monetary Policy Committee meets to discuss rates tomorrow.

Riz Malik of mortgage broker R3 Mortgages said: “The cost of borrowing money for two- and five-year fixed rates has decreased steadily. Even if the Bank of England raises the base rate tomorrow, fixed mortgage rate reductions are likely to persist. This is due to the fact that, according to Andrew Bailey’s estimates, we are approaching the top of the rate curve.

“With reduced inflation and worsening economic statistics, rates are expected to stabilise and possibly fall in an attempt to support the economy during a slowdown or a recession. Lenders have also been cutting fixed rates since they are falling short of their lending targets for the year. They want to keep the momentum going but without being overwhelmed, hence the ‘little and frequently’ rate drop tactic we’ve been seeing across the market.”

Bank of Ireland is cutting fixed rates for new residential and buy-to-let customers, available through brokers, from tomorrow (21 September). It is offering a two-year fixed rate for residential remortgage at 5.61% (75% LTV) with a £1,495 fee and a five-year fix at 5.32% (also 75% LTV) with a £995 fee
Platform, the specialist lending arm of Co-operative Bank, has withdrawn its residential and BTL deals for new business. At the same time it has said it will increase rates on product transfer deals by up to 0.1 percentage points. Aldermore is thought to be preparing a takeover of Platform’s parent bank, the Co-op
Principality building society is withdrawing its two-year fixed rates for new customers at 75% and 90% loan to value, available through brokers, from 8pm this evening.

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19 September: Bank Of England Rate Decision Due Thursday

First Direct, Virgin Money, TSB and Accord, the buy-to-let lending arm of Yorkshire building society, are the latest lenders to slash their fixed mortgage rates as competition hots up, despite a potential increase to interest rates by the Bank of England on Thursday, writes Jo Thornhill.

Direct-only lender First Direct, part of HSBC group, is cutting its two, three and five-year fixed rates by up to 0.19 percentage points, effective today (19 September), for new business and existing customers looking for a new deal.

The bank is offering a five-year fix at 5.08% and a two-year fix at 5.7%. Both deals are at 60% loan to value with a £490 fee, and are available for remortgage customers or existing customers looking to switch.

Virgin Money is cutting fixed rates for home purchase by up to 0.22 percentage points from tomorrow (20 September). Among its new deals, available through brokers, is a five-year fixed rate at 4.97% (65% LTV) with a £1,295 fee. It follows Yorkshire building society and The Mortgage Works in offering sub-5% deals (see stories below) for the first time in many months.

Virgin will also offer a fee-free two-year fix at 5.84% (65% LTV) and a five-year equivalent at 5.15%. A new range of buy-to-let deals will be launched with five-year rates starting from 5.2% (with a 3% fee). Selected residential and BTL remortgage deals will also be cut in price.

TSB has cut rates for existing customers looking for a new fixed rate deal and those looking for additional borrowing. Its five-year fixed rates for product transfer are cut by up to 0.15 percentage points, while 10-year fixed rates are cut by up to 0.25 percentage points. It has also launched new residential three-year fixed rates.

The bank’s five-year fixed rate switcher deals start from 5.19% (60% LTV) with a £995 fee, fee-free 10-year rates now start from 5.09%. Its three-year fixed rates start from 5.59% with a £995 fee.

Accord, the specialist buy-to-let (BTL) lender, is cutting rates by up to 0.51 percentage points from tomorrow (20 September).

Among its reduced rates the broker-only lender will offer a two-year BTL fee-free fixed rate for remortgage at 6.73% (75% LTV) and a five-year fix, also for remortgage, at 5.38% (60% LTV) with a £3,495 fee.

The next Bank of England interest rate decision is on 21 September. The current Bank Rate is 5.25%.

18 September: YBS Offers 75% LTV Five-Year Deal Below 5%

HSBC, Virgin Money and Yorkshire building society have all cut selected fixed rates across their respective home loan ranges, effective today. It comes as lenders and borrowers brace for the Bank of England rate decision on Thursday, writes Jo Thornhill.

Yorkshire building society has reduced selected rates, including a cut of 0.46 percentage points on its 95% loan to value deal for first-time buyers. The rate is now 6.19% with a £1,495 fee.

The mutual has also laid down the gauntlet to other lenders offering a five-year fixed rate at under 5%. The 4.99% deals with a £1,495 fee is available for both house purchase and remortgage and requires a 25% deposit or equity (75% LTV max).

Yorkshire follows The Mortgage Works, the specialist buy-to-let lender owned by Nationwide Building Society, in bringing down five-year fixed rates under 5%. TMW unveiled its 4.99% deal last week – it was the first sub-5% rate to be offered in several months (see story below).

HSBC has reduced the rate on its 95% loan to value (LTV) first-time buyer mortgage to 5.89% (this is a fee-free five-year fixed rate deal), plus remortgage cashback deals up to 90% LTV.

Product transfer deals for existing customers looking for a new rate, and those wanting additional borrowing, will also be cut by the bank.

The bank’s two-year fixed rate for remortgage (at 60% LTV) is now priced at 5.78%. The equivalent five-year deal is now at 5.29%. These deals have a £999 fee.

Buy-to-let fixed rates for existing customers switching and borrowing more, plus buy-to-let purchase and remortgage deals for new business have been cut on deals up to 75% LTV.

Virgin Money has cut fixed rates for home purchase, available through brokers, by up to 0.12 percentage points. It is offering a two-year fixed rate (65% LTV) at 5.6% with a £1,295 fee.

At the same time it has cut selected product transfer fixed rates by up to 0.10 percentage points with rates starting from 5.18%.

The bank has also launched new buy-to-let fixed rates with a £2,195 fee. It is offering a two-year and five-year fixed rate up to 75% LTV. Its five-year deal at 50% LTV is 5.62%. A two-year fix at 75% LTV is 6.18%.

Optimistic brokers now expect further rate cuts across the market, despite a potential increase to the Bank of England Bank Rate on Thursday this week (21 September).

Nick Mendes, mortgage technical manager at online broker John Charcol, says: “These rate reductions follow days of repricing by competitors. HSBC has cut rates twice in as many weeks, for example, proof that competition is hotting up.

“Given the current situation, we can expect high street lenders to make further reductions over the next few weeks as they jostle for new business.”

The Mortgage Works is reducing fixed rates on its buy-to-let product switcher range (deals for existing customers coming to the end of mortgage deals and looking for a new rate) by up to 0.2 percentage points from tomorrow (19 September). Among its new product transfer deals is a five-year fix at 5.49% (65% LTV) with a £1,495 fee. Last week the lender, part of Nationwide building society, made headlines by launching the first sub-5% five-year fixed rate in many months. The deal for purchase or remortgage, at 4.99%, is available to BTL borrowers with at least 45% equity or deposit and there is a 3% fee
Nottingham building society has cut its five-year residential fixed rates by up to 0.2 percentage points, while buy-to-let five-year fixed rates are cut by 0.1 percentage points. New rates and deals will be unveiled later this week The mutual will also launch new three-year fixed rate deals for residential borrowers up to 90% loan to value
Landbay, the buy-to-let (BTL) lender, has reduced rates across its limited edition standard five-year fixed rate deals by 0.10 percentage points. Deals now start at 5.05% (70% LTV) with a 7% fee
Keystone, the specialist BTL lender, has cut fixed rates for new and existing customers (product transfer deals) by up to 0.1 percentage points, effective today (18 September). Among the cuts it has reduced rates on its two-year fixed rates in its Standard and Specialist range at 65% LTV. Two-year rates now start from 5.19% with a 5.5% fee.

15 September: Specialist Lender Rate Dips Below 5%

Halifax, the UK’s biggest lender, is cutting fixed rates for new business by up to 0.5 percentage points from today (15 September) while Santander has cut selected fixed rates for residential purchase by up to 0.14 percentage points as a price war breaks out among leading lenders, writes Jo Thornhill.

The Mortgage Works, the specialist buy-to-let lending arm of Nationwide building society, is offering a five-year fixed rate deal at 4.99%, the first sub-5% rate to reach the market for several months. However, borrowers must have a deposit of at least 45% and they will have to pay a 3% fee.

Would-be landlords with less capital to put into the property can access reduced rates through The Mortgage Works, paying 0.50 percentage points less (5.04%) for a five-year fix at 65% LTV, again with a 3% fee. The equivalent deal at 75% LTV comes in at 5.29%.

As stories from past days (see below) show, other major lenders including Nationwide, Virgin and NatWest are cutting rates to make themselves more competitive.

Among Halifax’s new deals is a two-year fixed rate for purchase at 5.64% (60% LTV) with a £999 fee and a five-year fixed rate equivalent at 5.15%.

At higher LTVs Halifax’s two-year fixed rate is 6.06% (90% LTV) or five-year at 5.81% (95% LTV), both with a £999 fee. Fee-free options are available at a range of LTVs.

Santander’s new rates apply to fee-free fixed rate purchase deals over two, three and five-years. It has also introduced fixed rate deals for purchase at 60% loan to value, which include £500 cashback for first time buyers.

Its five-year fee-free fixed rate for home purchase is now 5.61% (85% LTV). The equivalent deal at 60% LTV is 5.52%. Fee-free two-year fixed rates for purchase now start from 6.19% (60% LTV). For borrowers with a 10% deposit (90% LTV) the rate is 6.5%.

Coventry building society, the eighth biggest mortgage lender, is cutting the cost of a range of its residential and buy-to-let fixed rates and selected tracker mortgage deals from today, 15 September.

Among the reductions Coventry will cut rates for residential remortgage and product transfer (rates for existing customers looking for a new deal) at 50% LTV up to 80% LTV, including offset and interest only mortgages. It will also cut tracker rate deals at 65% and 75% LTV. BTL fixed rates will be cut for new and existing customers.

Nick Mendes at broker John Charcol says Nationwide and Coventry have both had fixed rate deals at or close to the top of the tables in recent weeks: “Coventry has quickly revised its fixed rates after Nationwide building society gave notice of rate reductions yesterday.

“Both Nationwide and Coventry are leading the way in fixed rate pricing so to see this quick announcement is encouraging and suggests strong competition – which is good for borrowers.”

The Mortgage Works, the specialist lending arm of Nationwide building society, is cutting selected BTL fixed rates for purchase and remortgage from tomorrow by up to 0.5 percentage points. Among the highlights is a five-year fixed rate at 4.99% (55% LTV) with a 3% fee. Fixed rates across the lender’s range for large investment portfolios (multiple BTL properties) will be cut by up to 0.4 percentage points
Principality building society will cut the cost of selected fixed rates by up to 0.36 percentage points from Friday (15 September). Residential remortgage rates will be cut for deals at 75% LTV up to 95% LTV. At the same time the mutual is also cutting rates on its five-year fixed rate deal for holiday homes
The Mortgage Lender, the specialist buy-to-let lender, has cut selected fixed rates, effective today. It is offering a five-year fixed rate at 5.66% (down from 5.76%) at 75% LTV with a 5% fee
Specialist buy-to-let lender Precise Mortgages has cut fixed rates, available through brokers, for the second time in as many weeks. Among the new deals, available from tomorrow (14 September) will be lower two-year fixed rates with refunded valuations and £300 cashback for new borrowers.

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12 September: Bank Of England Rate Decision Due Next Week

Following moves by several lenders to cut fixed rates last week after Bank of England governor Andrew Bailey said interest rates were close to their peak (see stories below), more providers are tweaking rates down, writes Jo Thornhill.

Nationwide building society is cutting selected residential fixed rates by up to 0.29 percentage points from tomorrow (13 September).

The mutual, the UK’s second biggest lender, said swap rates (the wholesale interest rates at which banks lend to each other and which affect fixed mortgage rates) have continued to fall allowing it to make reduction to mortgage rates.

The biggest cuts are seen in two-year fixed rates for home purchase for borrowers with a small deposit. Nationwide is offering a two-year fix at 6.44% (down by 0.29 percentage points) with a £999 fee for buyers with just a 5% cash deposit.

Among other highlights Nationwide also has a fee-free three-year fixed rate at 6.09% (75% LTV). Its product transfer fixed rates and deals for additional borrowing will also be trimmed from tomorrow by up to 0.14 percentage points.

Accord, part of Yorkshire building society, has cut its fixed mortgage rates for residential borrowers for the second time in as many weeks. The reductions, by the broker-only lender, are up to 0.2 percentage points and effective tomorrow (13 September).

Among the highlights, Accord is offering a two-year fixed rate for home purchase at 5.94% (75% LTV) with a £1,495 fee, a three-year fixed rate for remortgage at 5.95% (85% LTV) with a £995 fee and a five-year fixed rate for remortgage at 5.6% (90% LTV) with a £495 fee.

Foundation Home Loans, the specialist buy-to-let lender, has cut rates across its core range by up to 0.9 percentage points. Its fixed-rate deals, available through brokers, now start from 6.59%. Two-year fixed rates start from 7.24% with a 1% fee.

Skipton building society has unveiled its new fixed rate deals for residential and buy-to-let borrowers, after it announced rate cuts yesterday.

It is offering a two-year fixed rate for residential remortgage at 6.26% (60% LTV) with a £995 fee and a five-year fixed rate equivalent at 5.59%.

The number of mortgage products on the market (5,338) is at its highest level since February 2022 (when the total was 5,356), according to data compiler Moneyfacts, suggesting stability could be returning to the home loans market.

Average two- and five-year fixed rates have fallen since the start of August and are at 6.70% and 6.19% respectively.

But the latest quarterly statistics from the Bank of England show a subdued picture of mortgage lending and house buying. While new mortgage advances (loans to be made in the coming months) picked up in the second quarter of 2023 – up 26.2% on the first quarter – at £61.7 billion, the figure is 26.6% less than in the same period last year.

The total value of all gross mortgage advances in the second quarter was £52.4 billion, which was £6.3 billion lower than in the previous quarter, and 32.8% lower than the same time period in 2022. This is the lowest recorded level since 2020.

The next Bank of England interest rate decision is on 21 September. The current Bank Rate is 5.25%.

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8 September: Governor’s Optimism Sparks More Reductions

More lenders are slashing the cost of borrowing following comments made by the Bank of England boss earlier this week that interest rates may be near their peak, writes Jo Thornhill.

Andrew Bailey, Bank of England governor, told MPs on Wednesday that the UK is now “much nearer” to the top of the current interest rate cycle. This remark has been taken positively by mortgage lenders, with increasing numbers announcing reductions to their fixed rates.

Virgin Money has cut selected fixed rate deals for residential purchase and remortgage by up to 0.69 percentage points. Among the highlights its five-year fixed rate for home purchase is now priced at 5.13% (65% LTV) with a £1,295 fee. The five-year fix for remortgage customers has dropped to 5.28% (60% LTV) with a £995 fee.

Virgin has also cut selected buy-to-let rates and product transfer fixed rates (for existing customers looking for a new deal) by up to 0.24 and 0.44 percentage points respectively.

Skipton building society is cutting the cost of selected mortgage deals – fixed and variable rates – from tomorrow (12 September). Fixed rates for residential and buy-to-let remortgage and home purchase will be cut by up to 0.1 percentage points and a new three-year fixed rate will be introduced. At the same time the mutual will cut up to 0.15 percentage points off selected discounted variable rate deals.

TSB has cut fixed rates by up to 0.5 percentage points across its residential and buy-to-let products, effective today. Its residential two and five-year fixed rates will be cut by up to 0.2 percentage points (for deals up to 75% loan to value), with the two and five-year fixed buy-to-let deals receiving the full 0.5 percentage point cut.

TSB is offering a five-year residential remortgage rate at 5.49% with a £995 fee (60% LTV). Its five-year BTL fixed rates now start from 5.39% (60% LTV) with a £1,995 fee.

TSB has also launched a range of fee-free remortgage deals for buy-to-let borrowers, fixed for either two or five years, with rates starting from 5.79 per cent.

Yorkshire building society has cut rates on fixed and tracker rate products by up to 0.41 percentage points.

Reacting to Mr Bailey’s comments this week, the society said it was seizing the “opportunity posed by positive market noises on interest rates”.

Its two-year fixed rates are being cut by up to 0.2 percentage points, its three-year fixes by up to 0.41 percentage points and its five-year fixes by as much as 0.2 percentage points. Many of its trackers also face reductions of 0.25 percentage points.

Among its new deals Yorkshire is offering a five-year fixed rate for remortgage at 5.31% (75% LTV) with a £495 fee, and a five-year fixed rate at 5.69% (95% LTV) with a £995 fee.

Specialist buy-to-let lender Precise Mortgages has cut five-year fixed rates across its limited edition range. Deals start from 5.24% (75% LTV) with a 7% fee.

7 September: Lenders Buoyed By Bank Of England Comments

NatWest is cutting the cost of fixed rate mortgage deals for new and existing customers from tomorrow. It is the bank’s second rate cut in a week, writes Jo Thornhill.

It comes after remarks made by Andrew Bailey, governor of the Bank of England, to MPs that the UK is now “much nearer” to the top of the current interest rate cycle, which appears to have been taken as a positive sign by mortgage lenders.

NatWest, the UK’s seventh largest mortgage lender, told brokers today that its two and five-year remortgage rates, typically the most popular deals for homeowners, will be cut by up to 0.12 percentage points on 8 September. Its five-year fixed rates will start from 5.4% (60% LTV) with a £995 fee.

Deals for homebuyers will be cut by up to 0.18 percentage points, while fixed rates for purchase under shared equity schemes are set to be cut by up to 0.28 percentage points. The lender’s five-year fixed rate for shared equity purchase will start from 5.19% (75% LTV) with a £995 fee.

Product transfer deals (deals for existing NatWest customers coming to the end of fixed rates and looking for a new deal) will be cut by up to 0.3 percentage points for residential and buy-to-let borrowers. Five-year residential fixed rates will start from 5.35% (60% LTV) with a £995 fee.

Nick Mendes at online broker John Charcol said: “NatWest has cut rates twice in a matter of days. While the last rate change was minimal in comparison to competitor rates, in light of the governor’s comments yesterday, and swap rates (wholesale bank rates which impact on fixed mortgage rates) reducing slightly, this has no doubt motivated NatWest to pass on further reductions. I would not be surprised if more lenders follow suit.”

Riz Malik at broker R3 Mortgages said: “In light of Andrew Bailey’s remarks, especially about potentially nearing the peak of the cycle, it’s probable we’ll see further reductions in the weeks ahead. Such comments likely boost lender confidence. With the expectation of a sharp fall in inflation, I think there is a chance of a ‘hold’ in the base rate decision before the year is out.”

The next inflation figures from the Office for National Statistics will be released on 20 September. The Bank of England Bank Rate announcement will be made the following day.

6 September: Fixed Rates Fall As SVRs Follow Bank Rate Hike

First Direct, part of the HSBC banking group, has cut fixed rates for new and existing borrowers and launched a three-year fixed rate deal, effective today, as it aims for the top of the best-buy tables, writes Jo Thornhill.

It is the third time First Direct has cut fixed rates in a month.

In the latest round, the bank has cut the cost of selected five-year fixed rates by up to 0.3 percentage points and is offering a market-leading five-year deal for remortgage fixed at 5.24% (60% loan to value ratio) with a £490 fee.

Its new two-year fixed rates start from 5.89%. It has also brought out a three-year fixed rate deal for new and existing customers priced from 5.79% (60% LTV), also with a £490 fee. The deal is available up to 90% LTV, where the rate is 6.04%.

Chris Pitt, CEO of First Direct, said: “Many customers are telling us they don’t want to fix for five-years but want fixed rate options that exceed two years. We have acted on the feedback we’ve received by launching this range of three-year fixed rates.”

Santander is cutting selected residential fixed rate deals, available through brokers, by up to 0.11 percentage points from tomorrow (7 September). The broker-only arm of the bank has cut two and five-year fixed rate deals for remortgage and launched new fixed rate deals at 60% LTV. The new rates will be unveiled tomorrow.

The Mortgage Works, part of Nationwide building society, has also cut selected fixed rates. Deals for limited company buy-to-let will be reduced by up to 0.5 percentage points from tomorrow. The lender will offer a two-year fix at 5.99% (75% LTV) with a 3% fee and a five-year fixed rate equivalent at 6.59%.

But while fixed rates continue to tumble as lenders fight for business, standard variable rates (the rate borrowers default to after a fixed or tracker rate deal ends, unless they switch to a new deal), are inching upwards following last month’s increase to the Bank of England’s Bank rate to 5.25%.

Virgin Money has said its SVR, already one of the highest in the market, will rise from 9.24% to 9.49% from 1 October for existing customers (or with immediate effect for new borrowers).

Its loyalty rate, for residential borrowers who have held a mortgage with Virgin for seven years or longer, will rise from 8.99% to 9.24%. The buy-to-let SVR is set to rise to 9.69%.

5 September: Paragon, Keystone Slash Costs For Landlords

More lenders are cutting the cost of mortgage borrowing as they scramble to grab new businesses in challenging market conditions, writes Jo Thornhill.

Following the lead of HSBC, NatWest and Nationwide and Coventry building societies – all major lenders that have all cut mortgage rates in the past week – a number of smaller and specialist lenders have also announced rate cuts.

Specialist buy-to-let lenders Paragon and Keystone Property Finance have all cut rates, effective today, in welcome news for landlords and property investors.

Paragon has reduced rates across 22 products in its buy-to-let range by up to 0.26 percentage points. The lender is now offering a two-year fixed rate at 4.59% (70% LTV) with a 5% fee, available for purchase or remortgage of single self-contained homes with EPC ratings of A to C.

Keystone has cut rates across all of its five-year fixed rate deals by up to 0.15 percentage points. Its standard BTL five-year fixed rates now start from 5.98% (65% LTV) with a 5.5% fee.

Bank of Ireland has cut rates for remortgage customers in its residential and buy-to-let ranges. The new rates will be effective from tomorrow (6 September). Among its residential deals it has a fee-free two-year fixed rate (60% LTV) at 5.89% and an equivalent five-year fixed rate at 5.49%.

The bank is also offering mortgage deals for green new-build homes (90% LTV) at 6.54% fixed for two years with no fee, or at 5.85% fixed for five years. For BTL the lender has a two-year fixed rate at 6.14% (60% LTV) with no fee.

Market Harborough building society has slashed its fixed rates by up to 0.35 percentage points on deals available through brokers. It has a two-year fixed rate at 6.29% with a £999 fee, available for borrowers purchasing second homes and applicants looking for joint borrower sole proprietor mortgages.

Clydesdale Bank, part of Virgin Money group, has cut selected two- and five-year fixed rate mortgage deals for new and existing customers by up to 0.2 percentage points, effective tomorrow (6 September). Among the changes the bank has cut its five-year fixed rate for remortgage at 80% LTV by 0.1 percentage point to 5.59%. Its two-year fixed rate for newly qualified professionals (up to 95% LTV) is cut by 0.2 percentage points to 6.6%.

Gen H has cut the cost of two- and five-year fixed rates by up to 0.17 percentage points. It is offering a five-year fixed rate at 95% LTV at 5.86% with a £999 fee, or 5.92% with no fee.

Accord, the specialist lending arm of Yorkshire building society, has also announced rate cuts of up to 0.2 percentage points on some of its high loan to value deals from tomorrow (6 September). It comes after the mutual lender had increased the cost of a range of its BTL mortgage deals just last week. Among the highlights, Accord will offer a fee-free five-year fixed rate for house purchase (95% LTV) at 6.12%.

Nick Mendes, mortgage technical manager at online broker John Charcol, says: “It has been yet another busy day with many lenders repricing their fixed rate products down. It is good to see the specialist lenders make these changes which shows the level of appetite and demand to attract business is not just limited to mainstream lenders.”

4 September: Skipton Extends 100% Track Record Deal Beyond ‘Official’ First-Time Buyers

Skipton building society has broadened the lending criteria on its Track Record mortgage to help more types of deposit-poor borrowers to buy a home, writes Jo Thornhill.

The lender’s Track Record deal, which launched back in May, is a 100% mortgage which initially targeted renters who had never previously owned a home. Today, Skipton extended the offering to buyers who have owned in the past but have ‘fallen off’ the property ladder – perhaps due to long-term illness, divorce or a relocation, for example.

Under the scheme, tenants who can evidence mortgage affordability, have a solid track record of rental payments (12 months or more) and who now haven’t owned a property in the past three years, can borrow without the need for a cash deposit.

The mortgage is a five-year fixed rate priced at 6.19%. Applicants must be aged over 21 and the loan can be taken over a maximum term of 35 years.

However, the monthly mortgage payment under Track Record cannot be more than the average monthly rental payment the borrower has paid over the last six months. For example, if the rent has been £800 a month on average, the maximum monthly mortgage payment must be no more than £800.

This is likely to restrict the maximum house price that borrowers can purchase through Track Record, particularly as the interest rate has risen since it launched.

Charlotte Harrison, chief executive of home financing at Skipton, said it had listened to customer feedback on the product before implementing the change. She said: “There are a number of reasons why people fall off the property ladder, from divorce, to relocating to a new area, and even critical illness.

“However, for many the climb back onto the property ladder can be a difficult one, leaving many trapped renting. From today we’re expanding the eligibility of the product to include renters who have previously owned a home.”

To date, the lender has received around £40 million in Track Record mortgage applications.

Elsewhere in the wider mortgage market lenders continue to fight for new business, tweaking rates to entice borrowers.

HSBC has cut its fixed rates for the second time in a week to push its deals further up the best buy tables. The bank is cutting a range of two and five-year fixed rates for residential remortgage, first-time buyer and home mover deals and product transfer rates, available through brokers, from tomorrow (5 September)
NatWest is also cutting a range of fixed and tracker rate deals by up to 0.55 percentage points for new customers from tomorrow (5 September). Selected residential and buy-to-let deals for remortgage and purchase, as well as some product transfer deals, will see reductions. The bank will offer a two-year fixed rate for remortgage at 6.09% (60% LTV) with a £995 fee and a five-year fixed rate equivalent at 5.49%
Aldermore, the specialist buy-to-let lender, has cut rates and from tomorrow will offer a limited edition two-year fixed rate deal for landlords at 5.74% (75% LTV) with a 3% fee
Specialist buy-to-let lender BM Solutions is cutting fixed rates by up to 0.71 percentage points from tomorrow (5 September). The lender’s two-year fixed rate deals for remortgage (65% LTV) are being cut by the full 0.71 percentage points and will start from 6.51%. Five-year fixed rates are cut by up to 0.4 percentage points and start from 5.71%.

31 August: Second Round Of Rate Cuts In As Many Weeks For Nationwide

Nationwide building society is cutting selected fixed and tracker rate deals for new and existing customers by up to 0.15 percentage points from tomorrow (1 September), writes Jo Thornhill.

Among its new deals will be a five-year fixed rate for remortgage priced at 5.4% with a £999 fee (60% Loan To Value (LTV), and a two-year equivalent deal priced at 5.9%. It will also offer a two-year tracker with a starting rate of 5.39%.

For existing customers moving home the lender has a five-year fixed rate at 5.19% (75% LTV) with a £999 fee, and a fee-free two-year fix at 6.04% (60% LTV). It also has a five-year fix at 5.65% (90% LTV) with a £999 fee.

It’s the second time Nationwide has cut selected fixed rate costs in as many weeks in response to the continued easing back of swap rate prices. Swap rates are the rates at which banks lend to each other and on which the cost of their fixed mortgage rate deals are priced.

It comes as other mortgage lenders are widening their lending criteria to align with competitors in the market and win more business in a contracting market (see story below on falling mortgage approval figures).

Accord Mortgages, the specialist lending arm of Yorkshire building society, has said it will now consider applicants on zero-hours’ contracts and annuity income for example, while earlier this week HSBC increased its maximum mortgage term from 35 to 40 years.

Riz Malik, director and founder of mortgage broker R3 Mortgages, commented: “We have seen some lenders change their criteria in an effort to accommodate additional business, including the sorts of income they will accept and the maximum age the applicant can take over the mortgage.”

However, Accord’s change in criteria only brings it into line with that of other major lenders. Lloyds Banking Group, Nationwide, Virgin, NatWest, Barclays, Santander, TSB and Coventry building society, for example, already consider zero-hours’ contract income under certain conditions and exclusions.

30 August: Coventry And Accord Announce Changes To Residential And Buy-To-Let Deals

Lenders continue to tinker with their mortgage rates as they jostle for new business or look to control their lending, writes Jo Thornhill.

Coventry building society is cutting the cost of a range of its residential and buy-to-let fixed rate deals from Friday (1 September).

The mutual lender is reducing all five-year fixed rates, and most of its two- and three-year fixed rates for residential remortgage, with a small number of exceptions.

Deals that fall outside of the round of reductions include its two- and three-year fee-free remortgage products at 65% loan to value, and its two-year 80% fee-free rate for home purchase.

All fixed rate product transfer deals – these are rates offered to existing customers looking for a new deal – will be cut in price except the three-year fix with a £999 fee at 80% LTV and the five-year green further advance rate at 75% LTV.

The majority of two- and five-year fixed rates for buy-to-let borrowers will also be cut from Friday, again with a small number of exceptions.

At the same time Accord, the specialist lending arm of Yorkshire building society, is increasing its fixed rate mortgage buy-to-let deals for existing customers, available through brokers.

From tomorrow (31 August) Accord’s two-year, three-year and five-year product transfer deals will increase by up to 0.12 percentage points.

Nick Mendes at mortgage broker John Charcol says the daily movements in rates by different lenders points to the ongoing volatility in the market. He said: “We have seen instances where clients are holding on to the hope that fixed rates will follow a downward trajectory without any hiccups, and while in an ideal world this would be a perfect scenario, it would seem there remain a few hurdles to overcome before we get to that point.”

Higher mortgage rates and costs of borrowing continue to have an effect on the market as Bank of England figures published today show net mortgage borrowing fell in July.

Net approvals (mortgages agreed for house purchase net of any cancellations) are considered an indicator of future borrowing and market activity.

There were 49,400 recorded mortgage approvals last month – down from 54,600 in June. Approvals for remortgage (switching to a different lender) increased slightly from 39,100 in June to 39,300 in July.

According to Mark Harris, chief executive of mortgage broker SPF Private Clients, buyers remain concerned about uncertainty in the wider economy and the prospect of further interest rate rises.

He said: “The average rate on new mortgages continued to rise in July, and the worst of the pain may not be over, with the market expecting the Bank of England to raise the base rate again next month.

“Swap rates, which underpin the pricing of fixed-rate mortgages, and have been exceptionally volatile in the past couple of months, have settled down since the encouraging dip in inflation. A number of lenders have been reducing their fixed rates and borrowers will be hoping others follow suit in coming weeks.”

29 August: Barclays Reduces Two-Year Fixed Rates To Sub-6%

Barclays has cut the cost of fixed rate mortgages for new residential and buy-to-let borrowers by up to 0.2 percentage points, writes Jo Thornhill.

The bank, the UK’s third biggest mortgage lender, is now offering a two-year fixed rate at 5.98% with a £999 fee (60% loan to value) and an equivalent five-year fixed rate deal priced at 5.37%. Both deals, which are available for remortgage, have been cut by 0.15 percentage points.

Major lenders have been shaving prices in recent weeks as swap rates have fallen and it’s Barclays’ second reduction to fixed rates in as many weeks.

So-called ‘swap’ rates are the amounts charged by banks as they lend to each other on wholesale money markets. They are the rates lenders use to price their fixed mortgage rates for customers. Two-year swap rates are at 5.25% today, compared to 5.47% at the end of last week.

But despite the easing in fixed rate mortgage pricing offering some hope to borrowers, the wider outlook for the housing market remains subdued.

Data published today by UK Finance in its quarterly Household Finance Review showed that borrowing for house purchase was down by almost one third in the second quarter of this year (April to June), compared to the same time in 2022. First-time buyer purchases and home mover purchases were down 28% and 30% respectively.

UK Finance, the trade body representing lenders, says the significant contraction in house purchase lending is largely due to cost-of-living pressures and higher interest rates which have raised the bar for affordability, limiting the ability of households to access mortgage credit.

It said: “The rapid increase seen in borrowing over a longer term as a means of stretching affordability looks to have reached its limit and is now falling away as the market cools.”

The report also found remortgage activity was weaker, compared to the same time last year, with more borrowers seeking new home loan deals with their existing lender (known as a product transfer) where affordability tests are not usually required.

This could indicate cost pressures are driving more borrowers to stick with existing lenders rather than seek new deals in the external market where there is likely to be greater scrutiny and stress testing for affordability.

Nick Mendes, mortgage technical manager at broker John Charcol, commented: “Mortgage affordability constraints and confidence will continue to show pressure for the rest of the year. Many mortgage holders are tied into longer term fixed rates, with a higher proportion coming out of these deals in 2024 compared to 2023. This will add pressure on future house purchase activity if rates remain high for longer than expected.”

Other changes from mortgage lenders today include the following:

Specialist buy-to-let lender Landbay has cut a range of its five-year fixed rate deals, available through brokers, at 60% and 75% loan to value by up to 0.1 percentage points. Deals start from 5.25% with a 7% fee or 5.45% with a 6% fee

HSBC has increased its maximum mortgage loan term from 35 years to 40 years. The change, effective from tomorrow (30 August) will apply to all home loans including purchase, remortgage and additional borrowing. It brings HSBC in line with the majority of the market in offering longer loan terms and greater flexibility for borrowers.

24 August: Deutsche Bank Expects 7% House Price Fall In 2023

TSB is cutting its two- and three-year fixed rate deals for new customers from tomorrow (25 August) by 0.1 percentage points.

The new two-year fixed rates, available on deals up to 75% loan to value, are for home purchase and remortgage. The new three-year fix is available up to 75% LTV for remortgage.

The bank cut fixed rates for purchase by up to 0.6 percentage points earlier in the week.

Lenders have been responding to falling swap rates (the rates at which banks lend to each other and on which fixed mortgage rates are based). Two-year swaps are at 5.484% today, down from 5.668% yesterday. The five-year rate has fallen to 4.810% from 5.017%.

Atom Bank, the digital app-based lender, has cut fixed rates by up to 0.25 percentage points. At the same time the bank has increased its maximum mortgage loan up to £1 million, for borrowers with at least a 15% deposit or equity.

The bank is offering a two-year fixed rate at 6.44% and a five-year rate at 5.74%. Both remortgage deals are fee-free and available up to 75% LTV. Atom also has a two-year fix at 6.19% and a five-year rate at 5.59%, both have a £900 fee (75% LTV).

Deutsche Bank has predicted a further 3% fall in average house prices over the remaining months of the year, which would give an annual fall of 7%, as it says the market is headed for a correction rather than a crash.

In its economic note the bank says: “Although this has been the third most acute price correction in modern times, it has done little to reverse previous gains and, in our view, is not a crash.”

It qualified the prediction by saying the UK housing market was “not out of the woods” and that stubborn inflation and rising mortgage rates could further dampen market activity.

23 August: Nationwide, HSBC, Virgin Money Trim Rates

Nationwide building society, the UK’s second biggest mortgage lender, has cut interest rates on fixed rate deals for new and existing customers by up to 0.4 percentage points, writes Jo Thornhill.

The new rates are the lender’s second rate cut in two weeks. They include a five-year fixed rate for remortgage customers at 5.49% with a £999 fee (60% LTV). This deal has been cut by 0.15 percentage points, putting it among the market-leading five-year fixed rates.

Average five-year fixed rates have fallen by 0.13 percentage points since Tuesday last week (15 August) according to data from our mortgage partner, Better. It shows that the average five-year fix is now 5.66%.

Among Nationwide’s other rate cuts there is:

Five-year fee-free fixed rate for home movers at 5.39% (60% LTV) – reduced by 0.4 percentage points
Two-year fixed rate for first-time buyers with a 25% deposit at 6.04% and a £999 fee – reduced by 0.1 percentage points
Selected product transfer deals for remortgage and home moves for existing Nationwide customers reduced by up to 0.4 percentage points.

Henry Jordan, director of home at Nationwide, says: “As economic conditions continue to stabilise, we are able to make further cuts to our mortgage rates, building on the reductions we have made in recent weeks.”

HSBC has cut fixed rates on selected residential and buy-to-let mortgage deals by up to 0.3 percentage points, including first-time buyer deals up to 90% LTV.

Its five-year fixed rate for residential remortgage is now at 5.44% with a £999 fee (60% LTV). It is also offering a fee-free two-year fixed rate for BTL purchase at 6.44% (60% LTV).

Virgin Money is cutting the cost of fixed rate mortgages for new and existing customers by up to 0.3 percentage points.

It is offering a five-year fixed rate for remortgage at 5.34% and a two-year fix at 5.9% (both deals are at 60% LTV and have a £995 fee). There is a five-year fixed rate for house purchase at 5.21% (75% LTV) with a £1,295 fee.

Virgin has also launched new fee-free remortgage deals, exclusive to brokers, with the two-year fixed rate at 6.36% and the five-year fix at 5.54%. Both deals are at 60% LTV.

21 August: Santander Trims Rates Through Broker Market

Santander has cut the cost of fixed rates mortgage deals available through brokers by up to 0.2 percentage point as the market continues to adjust to a smaller-than-expected rise in the Bank of England Bank Rate earlier this month, writes Jo Thornhill.

All major lenders have reduced their fixed rates over the past few weeks.

On 14 August Santander cut fixed rates by 0.29 percentage points for new customers going direct to the bank. Today its Santander for Intermediaries brand has followed that with cuts to fixed rates for residential and buy-to-let customers accessing deals through brokers.

The new rates will be effective from tomorrow when specific mortgage deals will be live to view on Santander’s website.

The bank will allow customers with pre-booked mortgage rates due to start on Sunday 3 September to cancel up until 10pm on Wednesday 23 August. Usually, Santander does not permit cancellations within 14 days of a mortgage start date.

Among the rate changes are:

residential fixed rates reduced by between 0.02 and 0.2 percentage points
new fee-free first-time buyer deals up to 95% loan to value
buy-to-let fixed rate deals reduced by between 0.04 and 0.2 percentage points.

The bank has also cut fixed rates on product transfer deals available to existing customers looking for a new mortgage.

Elsewhere in the market lenders continue to tweak their offerings, responding to swap rate movements (the rates at which banks lend to each other) and balancing business volumes:

TSB has cut three and five-year fixed rate deals for home purchase by up to 0.6 percentage points. Its five-year fix at 60% LTV is now 5.29% with a £995 fee. The fee-free equivalent is at 5.49%. Three-year fixed rates start from 5.84%
Aldermore has cut fixed rates on its residential and buy to let mortgage ranges for new and existing customers by up to 0.7 percentage points, effective from today (22 August). Some of the biggest rate cuts were applied to residential owner-occupier deals at high loan to value ratios. Among the newly-priced residential deals is a five-year fixed rate at 90% LTV priced at 7.29% with a £999 fee. Among its new buy-to-let rates, Aldermore has a two-year fixed rate at 6.59% (75% LTV) with a 1.5% fee. Product transfer deals for existing Aldermore customers have also been cut and include a fee-free two-year fixed rate at 95% LTV at 7.29%
Hampshire Trust Bank (HTB) has cut selected five-year fixed rates by up to 0.7 percentage points, effective today (22 August). The specialist lender, which offers mortgages for buy-to-let landlords and limited companies as well as expats and foreign nationals, is offering a five-year fix in its ERC Lite range at 7.49% and a five-year fix at 7.29% in its ERC Plus range (both up to 75% LTV and with a 2% arrangement fee). Its ERCs (early redemption charges) range from 4% to 5% for ERC Plus and 3% to 4% for ERC Lite deals
Keystone Mortgages, the buy-to-let lender, has increased selected fixed rates after withdrawing a range of its products from the market late last week when swap rates nudged upwards. Among the new deals in its Classic range for standard BTL borrowers is a five-year fix at 6.44% (65% LTV) with a 3.5% fee.

17 August: Skipton Rate Cut On No-Deposit Track Record Deal

Skipton building society has cut fixed rates by up to 0.22 percentage points across its standard residential range – including its 100% Track Record mortgage deal – as lenders jostle for new business, writes Jo Thornhill.

Following a fall in swap rates in recent weeks – the interbank interest rates which lenders use to price their fixed mortgage rates – all major lenders have taken a knife to their popular mortgage deals cutting costs for borrowers.

Skipton, the UK’s 11th largest mortgage lender, followed suit today with reduced rates which will be available from tomorrow (18 August).

Rate cuts extend to the lender’s Track Record mortgage which has been reduced by 0.15 percentage points from 6.44% to 6.29%. This fee-free five-year fixed rate loan is available to first time buyers with no deposit but who have proof of paying 12 consecutive months rent in the past 18 months, among other conditions.

Among Skipton’s other rate cuts is a 0.22 percentage point reduction in its fee-free five-year fixed rate at 95% loan to value from 6.24% to 6.02%. There is a slight tweak to its two-year fixed rate at 60% LTV from 6.02% to 5.96% with a £1,495 fee.

Buy-to-let rates have also been cut by the building society. Skipton is now offering a five-year BTL fixed deal at 5.62% (down from 5.74%) at 60% LTV with a £1,995 fee.

Platform Mortgages, part of Co-operative Bank group, has also cut the cost of a range of its residential and buy-to-let mortgage deals for new and existing customers, available through brokers, by up to 0.29 percentage points. It has a two-year fixed rate at 5.92% (60% LTV) with a £999 fee. The equivalent five-year fixed rate is 5.4%.

While Skipton and Platform’s rate reductions form part of a larger, recent flurry of mortgage rate cuts, against a backdrop of continued falling inflation, much higher mortgage costs in general are forcing more borrowers to extend the term of their loan to bring down monthly repayments.

According to report published today from credit reference agency Equifax, four-in-ten homeowners (41%) now have a mortgage term that runs past retirement age (66). More than a quarter of these loans are held by borrowers who will be older than 70 when their mortgage matures.

Brokers say it is not surprising that more borrowers are extending the term of their mortgage in a bid to tackle rising living costs – but it means people are saddled with their debt for much longer.

Nick Mendes, mortgage technical manager at online broker John Charcol, commented: “We’ve seen a steady increase over the last few years of first-time buyers choosing to take the mortgage over 35 and 40 years – but they’re not the only borrowers choosing to extend their term.

“We have seen more homeowners coming to the end of their fixed rate deal looking to extend to help soften their monthly outgoing due to increased mortgage rates, plus the increased costs of other household expenditure, such as energy bills and food prices.”

He added that lender attitudes have also changed with more now accepting terms beyond traditional retirement age – but where the mortgage must end by the age of 75.

16 August: Positive Inflation News Justifies Lenders’ Cuts

Barclays has cut the cost of fixed rate borrowing on selected loan deals. It became the last of the biggest six lenders to cut rates over the past two weeks, writes Jo Thornhill.

Its two-year fix for purchase and remortgage customers is cut from 6.30% to 6.13% (60% LTV) with a £1,999 fee. The equivalent five-year fix is cut from 5.95% to 5.52%.

The bank’s two-year fixed rate fee-free deal for product transfer (85% LTV) is cut from 6.96% to 6.66% and its five-year Reward fixed rate deal, also fee-free for product transfer, is cut from 7.03% to 6.73% (also 85% LTV).

Lenders have been cutting rates to reflect downward movements in so-called ‘swap’ rates – the amounts charged by banks as they lend to each other on wholesale money markets.

Swap rates have fallen in expectation that the Bank of England is at or is close to the end of its current trajectory of increasing the Bank Rate, which stands at 5.25%.

Today’s announcement that inflation in July fell to 6.8% from 7.9% in June will strengthen the belief that interest rates are near to top of the cycle, although separate data on wage growth – running at 7.8% in the three months to June – may encourage the Bank to raise the rate to 5.5% when it next announces its decision on 21 September.

However, the belief is that lenders have already priced such an increase into their own pricing strategies for mortgage products.

In addition to Barclays, other lenders have been adjusting their rates…

Bank of Ireland is cutting fixed rates for new customers across its range from tomorrow (16 August). It is offering a two-year fix for remortgage at 85% LTV at 6.15% (down from 6.30%) with a £995 fee. It has a five-year fix, also for remortgage, at 75% LTV at 5.55% (down from 5.62%) with a £995 fee.

Halifax has cut rates on selected two, five and 10-year fixed rate residential mortgage deals by up to 0.71 percentage points following a glut of lenders, including NatWest, Santander, HSBC, First Direct and TSB, who have cut rates in recent days.

The bank, which is the UK’s biggest mortgage lender, has cut rates across its range, including for first-time buyers, new build, shared equity and large loan mortgages.

It is offering a five-year fixed rate for home purchase at 5.28% (down from 5.99%) with a £999 fee (60% loan to value). It has a two-year fixed rate at 6.18% (down from 6.45%), also with a £999 fee (80% LTV).

Santander has also slashed the cost of fixed rate mortgage deals for new customers. Rates fell by up to 0.29 percentage points on selected residential purchase and remortgage fixed rate deals on 14 August.

NatWest has cut fixed rates across selected residential deals by up to 0.45 percentage points – its second rate cut in as many weeks. It is offering a two-year fee-free fixed rate at 6.19% (60% LTV) and a five-year fee-free fix at 6.39% (95% LTV) – both deals are available for new borrowers purchasing property. A two-year remortgage fixed rate is available at 6.54% (90% LTV) with no fee.

It had previously cut selected two and five-year fixed rates by up to 0.65 percentage points for new customers, offering a two-year fixed rate for remortgage at 6.16% (60% LTV) with a £995 fee and an equivalent five-year fix at 5.63%. The bank is also cutting fixed rates across its first-time buyer, shared equity loan, help to buy remortgage deals and buy-to-let loans.

First Direct has cut its two, five and 10-year fixed rate deals by up to 0.2 percentage points. The bank is offering a 10-year fix for remortgage customers starting at 5.19% (75% LTV) with a £490 booking fee. Its lowest two-year fixed rate for remortgage (at 60% LTV) is now at 5.99% with a £490 fee. The equivalent five-year rate is now 5.49%.

HSBC has cut rates across its residential range by 0.2 percentage points, on average (rate cuts range between 0.05 percentage points and 0.35 percentage points).

The lender is offering a two-year and five-year fix for remortgage from 6.09% and 5.49% respectively. These deals are at 60% loan to value and have a £999 fee.

TSB has also cut rates on its five-year fixed rate residential deals for new customers by up to 0.4 percentage points. Its five-year deals start at 5.44% for borrowers with 40% deposit or equity in their home. There is a £995 fee.

Nick Mendes, mortgage technical manager at broker John Charcol, said: “Fixed rates are on a downward trend, but core inflation remains close to a 30-year high, which is the area the Bank of England is targeting to bring down, so we should still expect another interest rate rise in September. But hopefully this marks the start of a downward trend for mortgage rates.”

Mortgage lenders will be watching closely on 16 August when the latest inflation figures will be released by the Office for National Statistics. If positive signs start to emerge that inflation is falling more quickly, this should bring further stability to the mortgage market.

Virgin Money has given notice to brokers of its intention to withdraw a range of its two- and five-year remortgage deals on Thursday 17 August. It has also withdrawn its five-year fixed rates with a £1,495 fee for home purchase.

At the same time Virgin has cut fixed rates for purchase, through brokers, with a £1,295 fee by up to 0.16 percentage points – new rates start from 5.23%. Selected product transfer and buy-to-let fixed rates are being cut by between 0.1 and 0.14 percentage points. Virgin’s five-year fix for remortgage through brokers, with a £1,495 fee, is now at 5.44% (65% LTV).

Yorkshire building society has cut borrowing rates for customers with a low deposit or equity in their home. It has a two-year fixed rate for home purchase at 6.08% (was 6.35%) for borrowers with a 15% deposit. The equivalent five-year fix for purchase is at 5.59% (was 5.69%). Both deals have a £1,495 fee. It also has a fee-free five-year fixed rate at 5.77% (was 5.89%) for remortgage at 90% LTV.
State Bank of India has cut rates across its buy-to-let product range for new business. It is offering two-year fixed rates from 5.65% and five-year rates from 6% (65% LTV).
Nottingham building society has cut rates for new borrowers. Among its new rates, the mutual is offering a five-year fixed rate (75% LTV) at 5.39% or at 5.57% at 80% LTV. Both deals have a £999 fee.
Accord Mortgages, part of Yorkshire building society, has cut fixed rates by up to 0.8 percentage points for borrowers with a 5% cash deposit. The new rates will be available through brokers from tomorrow (16 August). The lender is offering a two-year fixed rate for purchase at 6.92% (previously 7.72%) with a £995 fee (with £250 cashback on completion). The equivalent three-year fix is at 6.79%. Accord has also reduced rates by 0.1 percentage point on its five-year fixed rate deal in the Deposit Unlock scheme (which helps buyers with a 5% cash deposit purchase new build homes).
CHL Mortgages, the specialist buy-to-let lender, has cut its five-year fixed rates by up to 0.34 percentage points. The lender’s best five-year standard BTL rates now start from 5.94% with a 7% fee. Five-year fixed rates with a 3% fee start from 6.93%.
Coventry building society is cutting fixed rates for new borrowers. The new rates will be effective from Thursday (17 August) when the new deals will be revealed.
Principality building society has notified brokers of changes to its residential fixed rates for new borrowers. Two and five-year fixed rates at 75% loan to value are being cut by up to 0.3 percentage points while fixed rates at 95% loan to value will increase by up to 0.15 percentage points
Market Harborough building society is cutting fixed rates by up to 0.7 percentage points for expat, holiday let, multi-generational and larger loan mortgages. The lender is offering a three-year fixed rate at 6.09% (75% LTV) with a £299 fee
Specialist buy-to-let lender Keystone Property Finance has cut fixed rates in its Classic range by up to 0.25 percentage points. Its two-year fixed rate is 6.64% (65% LTV) with a 2.5% arrangement fee. The equivalent five-year fixed rate is 6.49%.
Paragon Mortgages, the buy-to-let specialist lender, has cut fixed borrowing rates by up to 0.45 percentage points. Rates for two-year fixes start from 4.85% with a 5% fee. This is for single self-contained BTL properties with an energy performance certificate of A to C. Loans are available up to 70% loan to value.
Gen H has cut fixed rate deals by up to 0.16 percentage points with five-year loans available up to 95% LTV starting from 5.97% with a £999 fee. This rate is available to borrowers who use Gen H Legal for their conveyancing.

8 August: Market Hopeful Bank Rate Cycle Has Peaked

Nationwide building society has cut the cost of its fixed rate mortgage deals for new customers by up to 0.55 percentage points, following a number of lenders who also shaved rates last week, writes Jo Thornhill.

Among the mutual lender’s new deals, effective tomorrow (9 August), is a fee-free two-year fixed rate for remortgage at 6.19% (75% LTV), reduced from 6.39%, and a five-year fixed rate for remortgage at 5.64% (60% LTV) with a £999 fee, down from 5.69%.

Two, three and five-year fixed rates have also been cut for home movers and first-time buyers. The two-year fixed rate for new customers moving home (60% LTV) is now 6.14%, down from 6.34%. There is a £999 fee. The equivalent five-year rate is 5.64%.

Nationwide, which cut its product transfer fixed rates last week (the rates on offer to existing customers looking for a new deal), is following other major lenders including Halifax, Santander, Barclays, NatWest, Coventry, Virgin and HSBC in cutting fixed rates for new customers.

The moves follow the Bank of England’s quarter percentage point increase to the Bank Rate, from 5% to 5.25%, on 3 August. The market is now predicting borrowing costs have reached or are close to their peak for this cycle.

Henry Jordan, director of home at Nationwide, said: “These latest changes build on the reductions we made last week for existing customers. With swap rates having fallen from their early July peak and stabilised somewhat, we are now able to reduce rates for new customers.”

Mpowered Mortgages has reduced the cost of its fixed rates across its prime residential range. Its two-year and five-year fixed rates for remortgage now start from 5.86% (60% LTV) and 5.49% respectively.

4 August: More Lenders Trim Rates In Wake Of Bank Rate Hike

Lenders are continuing to reduce the cost of mortgage deals, signalling that the cost of borrowing may have neared or even reached the top of the rate-hike cycle, writes Laura Howard.

From today (4 August) Santander is reducing fixed rates across its entire range of residential and buy-to-let deals for new business by up to 0.39 percentage points. For existing customers transferring products, residential and buy-to-let fixed rates will reduce by up to 0.25 percentage points, and some tracker rates by up to 0.60 percentage points
Coventry Building Society has lowered residential rates by up to 0.63 percentage points and on selected buy-to-let deals by around 0.55 percentage points, also from today. The lender has also introduced new three-year fixed rate options for residential customers
Clydesdale Bank cut the cost of residential and buy-to-let deals yesterday (3 August) by up to 30 percentage points. Rate reductions also apply to higher loan-to-value products, such as the lender’s two-year fix now priced at 6.20% for a 10% deposit
The Mortgage Works – a subsidiary of Nationwide – is also slashing buy-to-let rates by up to 0.95 percentage points across one, two, five and 10-year deals, from today.

The lenders follow in the wake of HSBC, Barclays, and NatWest, all of which cut the cost of fixed rates in recent days and weeks – see story below.

Yesterday, the Bank of England raised interest rates from 5% to 5.25%. However, the latest rise – the 14th in succession by the Bank – is expected by some commentators to represent the peak of the current rate-rise cycle.

Even if the Bank Rate rises to 5.5% or 5.75% by the end of the year, mortgage lenders are believed to have ‘priced-in’ the increases already as far as their own lending rates are concerned.

The Bank uses interest rate rises as a tool to control Inflation, which fell sharply to 7.9% in June from 8.7% in May.

Adrian Anderson, director of property finance at broker Anderson Harris said he is not expecting banks to increase fixed rates further in line with the latest announcement.

However, he added: “I remain concerned about the ongoing affordability for many households with mortgages who are already struggling with the cost-of-living crisis. The latest rate rise will certainly heap more misery on the circa 2.2m borrowers who are paying a variable rate mortgage.”

2 August: Three More Lenders Slash Fixed Rate Mortgage Costs

Three major lenders – NatWest, Halifax and Virgin Money – have cut rates across a range of mortgage products, offering further hope that home borrowing costs may have reached their peak, writes Laura Howard.

NatWest has reduced some fixed rate products over two and five years by up to 0.30 percentage points from today (Wednesday). This includes a reduction of its five-year fixed rate mortgage (at 75% loan to value) to 5.89% (with no arrangement fee)
Also from today, Virgin Money has cut costs across some of its mortgage deals offered via mortgage brokers by up to 0.41 percentage points as in the case of its five-year fixed rate which was slashed down to 5.25% (65% loan to value with a £1,295 fee)
Yesterday, Halifax reduced the rate on its five-year remortgage deal by a smaller margin of 0.18 percentage points to a new cost of 5.78% (60% loan to value) with no fee. Its 10-year fix was reduced by up to 0.27 percentage points, with the 60% loan to value option now priced at 5.23%, also with no fee.

The banks follow in the footsteps of Nationwide, Barclays and TSB which, last week, also announced a raft of rate cuts – details of which are outlined in the story below – as inflation shows positive signs of cooling.

However, recent rate cuts will be cold comfort to the customers of an estimated 2.4 million fixed rate deals which end between summer 2023 and the end of 2024, according to UK Finance.

On Monday the trade organisation launched its Reach Out campaign which is designed to raise awareness of the support available to homeowners struggling with higher mortgage costs.

The campaign follows June’s publication of a new Mortgage Charter, which sets out joint commitments between the government, the Financial Conduct Authority and the 43 lenders that have signed, to offer more options for struggling homeowners.

These include switching to an interest-only loan for six months, extending the term of a mortgage, and locking in a new deal up to six months in advance.

The next decision on interest rates will be taken by the Bank of England’s Monetary Policy Committee tomorrow (Thursday 3 August). However, with inflation still running at nearly four times the Government’s 2% target, many commentators are expecting another rise, possibly from the current 5% to 5.25%.

28 July: Nationwide, TSB, HSBC, Barclays Announce Rate Cuts

Nationwide, TSB, HSBC, Barclays have reduced rates on selected fixed-rate mortgage deals this week, offering a glimmer of hope to buyers faced with soaring rates writes Bethany Garner.

Rates have fallen by as much as 0.40 percentage points, with some deals dipping below 6%.

Nationwide is reducing rates on its switcher mortgage products by up to 0.35 percentage points, effective today (28 July).

The provider’s switcher mortgages are open to existing members with less than six months remaining on their current deal.

At a loan to value ratio (LTV) of 60%, its two-year fixed rate has dropped by 0.30 percentage points to 5.79% (when borrowers pay a £999 fee). The rate for the fee-free version is 5.99%, down 0.35 percentage points.

Elsewhere, five-year fixed rates at 60% LTV have dropped by 0.25 percentage points to 2.24%, while at an LTV of 80%, the five-year fixed rate is now 5.29% (down 0.20 percentage points).

TSB has cut rates on its two-year fixed rate mortgages – also effective today.

At an LTV of 60%, the bank’s two-year fixed rate has dropped 0.35 percentage points to 6.09% when borrowers pay a £995 fee. The fee-free version now charges a rate of 6.49% – also down 0.35 percentage points.

Meanwhile, the rate for a two-year fix at an LTV of 85% is down 0.40 percentage points, to 6.59%.

HSBC cut rates on a number of mortgage deals on Wednesday (26 July) – including its two-year fixed rate products.

Borrowers with a 40% deposit will now be offered a rate of 6.14% – down 0.10 percentage points.

Barclays has reduced interest rates across a range of fixed-rate mortgages, effective Wednesday 26 July.

At an LTV of 60%, the provider’s two-year fixed rate has decreased by 0.15 percentage points, to 5.93%. This loan comes with a product fee of £899 – its fee-free equivalent charges a higher rate of 6.12% (down from 6.27%).

The lender’s five-year fixed rates have also been reduced. At an LTV of 60%, rates have dropped 0.15 percentage points, to 5.32%.

Elsewhere, Barclays has reduced rates for existing customers looking to renew their mortgage.

For instance, at an LTV of 60%, the bank’s two-year fixed rate has fallen from 6.25% to 6.10%. The loan charges a product fee of £999. Its fee-free equivalent comes with an interest rate of 6.44% – down from 6.59%.

Rates on exclusive five-year deals are also down by up to 0.15 percentage points.

Yorkshire Building Society today introduced a £2,000 ‘cashback’ mortgage designed to help first-time buyers onto the property ladder.

The mortgage, available exclusively to first-time buyers, pays the £2,000 cashback when borrowers take out selected five-year fixed rate products at 90% to 95% LTV.

The society has also reduced selected mortgage rates by up to 0.30 percentage points.

Coventry Building Society has also cut its two and five-year fixed rate home loans for new business residential borrowers.

Rates will be lowered by 0.22 and 0.54 percentage points respectively. The reductions include a residential purchase or remortgage product at 75% LTV, fixed for two years at a new rate of 6.23%.

The two-year deal costs £999, but comes with a £350 cashback or remortgage transfer service (where Coventry takes on the legal paperwork).

20 July: NatWest, Virgin Tweak Rates Upwards

NatWest and Virgin Money have increased selected fixed-rate mortgage deals as lenders take stock following yesterday’s inflation news, writes Jo Thornhill.

Inflation fell sharply from 8.7% to 7.9% in June, according to Office for National Statistics data. Experts are now predicting the Bank of England may only need to increase the Bank Rate by 0.25 percentage points next month, rather than 0.5 percentage points as previously.

Swap rates – the rates at which banks lend to each other and which are a marker for fixed mortgage rates – eased back yesterday. Rates on two- and five-year residential fixed rate mortgages have subsequently fallen for the first time since May, according to Moneyfacts.

The average two-year fixed-rate residential mortgage rate is now 0.02 percentage points lower than yesterday (19 July), down from 6.81% to 6.79% today. The average five-year rate residential mortgage rate is also 0.02 percentage points lower at 6.31%.

But although this will be welcome news for borrowers looking for a new deal, some lenders are still tweaking their fixed rates upwards, particularly for customers with a smaller deposit or modest equity in their home.

NatWest has increased fixed rates for new purchase and remortgage customers, effective today (20 July) by up to 0.4 percentage points.

Fixed rates for purchase at 95% loan to value rise by 0.4 percentage points, while deals at 90% LTV increase by up to 0.3 percentage points. Two and five-year fixed rates for remortgage at 90% LTV are increased by up to 0.3 percentage points.

The bank’s two-year fixed rate for home purchase (90% LTV) with a £995 fee is now 6.74%, up from 6.54%.

NatWest’s two-year fixed rate for existing customers looking to switch to a new deal (product transfer) have increased by 0.25 percentage points, while selected five-year product transfer deals have been cut by 0.05 percentage points.

Virgin Money has also increased a range of its fixed rate deals this morning. Its two, three and five-year fixed rate deals for remortgage through brokers have been increased by up to 0.22 percentage points.

The lender’s two-year fixed rate for remortgages starts from 6.31% (65% LTV) with a £995 fee, or from 5.56% for the equivalent five-year deal.

The lender has also unveiled a new seven-year fixed rate deal for remortgage at 60% LTV at 5.2%.

On product transfer deals, selected two, three and five-year fixed rates have been increased by up to 0.27 percentage points. Two-year fixed rates start from 6.12% (65% LTV) or from 5.51% over five-years, with a £995 fee.

TSB has increased the cost of selected purchase and remortgage fixed rates, shared ownership deals and fixed rates in its buy-to-let range by up to 1.05 percentage points. Its two-year fixed rates for new customers (purchase and remortgage) are going up by 0.15 percentage points and now start from 6.39% (60% LTV).

State Bank of India has also increased selected fixed rates across its buy-to-let range. Its five-year fixed rates for standard BTL borrowers start from 6.1% with a 2% fee (75% LTV max).

The next Bank of England interest rate decision is due on 3 August.

18 July: More Gloom For Borrowers As Rates Rise Further

More lenders have announced increases to the cost of their fixed rate mortgage deals as the market braces for inflation news tomorrow, writes Jo Thornhill.

Principality building society has said it will increase fixed rates for new residential customers at higher loan to value (LTV) ratios from Thursday, 20 July.

The mutual’s two, three and five-year fixed rates for remortgage customers at 85%, 90% and 95% LTV will increase by up to 0.2 percentage points. Its new two-year fixed rate (85% LTV) will be priced at 6.55%, for example.

Saffron building society is withdrawing a number of deals, available through brokers, at 5pm today (18 July), including its self-employed, contractor and buy-to-let mortgages.

Its new rates are likely to be priced higher as the mutual responds to changing market conditions.

Specialist buy-to-let lender Lendco has announced it is increasing selected fixed rates in its range including its popular five-year fixed rate, product transfer deals (for existing customers looking for a new deal), and some tracker deals.

At the same time Lendo has withdrawn all of its two-year fixed rates.

Another buy-to-let specialist, Together Mortgages, is also increasing fixed rates by up to 0.55 percentage points for standard BTL two-year fixed rates and by up to 0.5 percentage points for limited company BTL. The changes are effective from tomorrow (19 July).

In its note to brokers Together said the reprice was “due to the ongoing challenges with funding costs.”

Borrowers looking for a new mortgage could be facing further cost increases if inflation does not fall significantly when the latest figure is published by the Office for National Statistics at 7am tomorrow.

While expectations are that there should be a fall from the 8.7% inflation figure recorded for May (published last month) to around 8-8.2%, anything higher than this will pile more pressure on the Bank of England’s Monetary Policy Committee to make further interest rate increases.

This could potentially mean an increase of 0.5 percentage points in August (which would take the Bank Rate to 5.5%), rather than 0.25 percentage points rise many had been expecting.

17 July: ONS Statistics This Weds Will Determine Next Moves

Coventry building society is increasing the cost of its fixed rate borrowing for new residential and buy-to-let customers from Wednesday (19 July), writes Jo Thornhill.

The mutual, the eighth largest UK mortgage lender, will withdraw residential remortgage and BtL fixed rates, including interest-only and offset rates, available through brokers, from tomorrow (18 July) at 8pm.

Higher-priced fixed rates for new residential borrowers and buy-to-let customers will launch at 8am on 19 July.

But despite Coventry’s move and a small number of other lenders tweaking selected rates upwards (see round-up below), brokers are not expecting further increases across the board to fixed borrowing rates.

That is unless the latest ONS inflation measure, which will be published on Wednesday, shows inflation has not fallen significantly. It was recorded at 8.7% in May when the figure was published last month.

Nick Mendes, mortgage technical manager at online broker John Charcol, said it feels as though the markets are taking a breath and waiting for the inflation figure: “Markets are trying to second guess whether inflation has come down or will remain stubborn.

“Initial signs are that the market is expecting to see core inflation fall slightly in June. But if the rate does not fall significantly it is likely to mean interest rates will have to rise another 0.5 percentage points rather than 0.25. That could set off further increases to fixed mortgage rates.”

Coventry’s fixed rates for residential borrowers at 80% loan to value and buy-to-let deals for new borrowers at 75% LTV are being withdrawn. There are no changes to product transfer deals for existing customers looking for a new fixed rate deal.

Other rate changes include:

Halifax is increasing two and five-year fixed rates across its range of first-time buyer deals, new build, large loans and affordable housing mortgages (including shared equity, shared ownership and the equivalent Green Home products) from Wednesday
MPowered Mortgages is increasing the cost of its five-year fixed rate mortgages. Current rates, available through brokers, are being withdrawn tomorrow at 5.30pm, with new rates available from Wednesday.

July 14: TSB Raises Costs For New Customers Looking For Longer-Term Security

TSB is increasing the cost of its five-year fixed rates for new customers by up to 0.5 percentage points, from today, writes Jo Thornhill.

Five-year fixed rates for home purchase (which includes first-time buyers and home movers) now range from 5.79% (at 60% loan to value) up to 6.54% (at 95% LTV). Both deals carry a £995 fee.

A five-year fixed rate for remortgage will now start at 5.79% (60% LTV) or at 6.34% (95% LTV), also each with a £995 fee. Fee-free options are available with TSB but it usually means borrowers pay a higher fixed rate.

TSB follows most other major lenders in hiking borrowing costs since the Bank of England increased the Bank Rate to 5% last month. Barclays, HSBC, Nationwide, NatWest, Virgin Money and Santander have all increased fixed rate deals this week.

The average cost of a two-year fixed rate residential mortgage is creeping close to 7%, according to Moneyfacts today. Average two-year rates rose to 6.78% this morning – up from 6.75% yesterday.

Five-year fixed rate residential mortgages also continue to rise. The average five-year fix in the market is at 6.30% today, compared to 6.27% yesterday, says Moneyfacts.

Further evidence has emerged that increased mortgage costs are causing financial distress for growing numbers of borrowers. Legal & General’s mortgage platform Ignite, used by brokers, reported a 53% increase in searches for interest-only mortgages in June, compared to the previous month.

Paying only the interest on a mortgage means a lower monthly cost compared to standard repayment mortgage which repays the capital debt as well as the interest.

However, only borrowers who meet strict eligibilty requirements have a chance of being offered an interest-only mortgage, according to David Hollingworth at broker London & Country Mortgages. He said: “There will usually be limits on the maximum loan to value and some lenders also impose a minimum income requirement.”

While the sale of a property may be accepted by some lenders as a repayment vehicle (to pay off the capital at the end of the term), a minimum amount of equity will be required, which could amount to “several hundred thousand pounds,” he added.

13 July: Third Rise In Days Reflects Market Volatility

Santander has increased selected fixed rates for new customers by up to 0.3 percentage points. It is the bank’s third rate increase in as many weeks, having increased fixed rates on 26 June and 5 July, writes Jo Thornhill.

Fixed mortgage rates continue their upward climb due to volatility in the market. Many lenders have withdrawn fixed-rate deals at short notice as they struggle to cope with high business demand when their rates are at the lower end of the market.

The rates are inevitably increased when they are reintroduced.

Santander has increased fixed rates for purchase and remortgage deals for new residential and buy-to-let customers. Product transfer rates are unaffected.

The bank’s two-year fixed rate for remortgage (75% LTV) has risen to 6.14% from 5.94%, with a £999 fee. The five-year equivalent fix is now 5.59% (up from 5.39%).

It has also launched new fixed rates for larger loans (£250,000 to £3 million). Purchase fixed rates are at 6.44% for two years or 6.14% for five years, and remortgage fixed rates are at 6.76% for two years or 6.5% over five years.

All deals are up to a maximum 70% loan to value and have a £2,499 fee.

12 July: Millions Face Higher Costs As Banks Deemed ‘Resilient’

Barclays and NatWest have unveiled higher fixed rates for mortgage borrowers with some deals increased by up to 1.25 percentage points, writes Jo Thornhill.

The news comes as Bank of England figures out today show one million residential mortgage holders will be paying £200 a month or more extra for their home loan by the end of the year.

It is feared some borrowers may be paying £500 per month more for their mortgage by 2026.

Barclays has increased fixed rates across its range from this morning (12 July). The bank’s popular two-year fixed rate remortgage deal has gone up by 0.35 percentage points to 6.28% (60% LTV) with a £999 fee.

The equivalent five-year fixed rate has been tweaked upwards to 5.67% from 5.62%.

NatWest has increased fixed rates for residential remortgage, purchase and first-time buyers by up to 0.38 percentage points. Fixed rates for buy-to-let borrowers have risen by up to 1.25 percentage points.

Among the bank’s owner-occupier deals are a two-year fixed rate at 6.44% and five-year fixed rates from 5.99% (75% LTV) with a £995 fee.

NatWest’s buy-to-let fixed rates, available through brokers, have seen significant increases. The two-year fix with a £995 fee (60% LTV) has risen to 6.49% from 5.24%.

In its Financial Stability report published today, the Bank of England says increased interest and mortgage rates could lead some households to struggle to afford their repayments and even default on their debt.

Its figures reveal the extent of mortgage rate increases for homeowners with statistics suggesting around one million borrowers will be paying at least £200 a month more for their mortgage by the end of the year.

Around three million mortgage holders will face the same prospect by the end of 2026. And one million households will see increases to their monthly repayments of £500 or more over the next few years.

But the Bank of England said:“Although the proportion of income that UK households overall spend on mortgage payments is expected to rise, it should remain below the peaks experienced in the Global Financial Crisis and in the early 1990s.

“UK banks are in a strong position to support customers who are facing payment difficulties. This should mean lower defaults than in previous years in which borrowers have been under pressure.”

Following government intervention last month, mortgage lenders agreed to sign up to a mortgage charter, aimed at supporting borrowers in financial difficulties due to rising rates.

The charter states, among other measures, that borrowers can opt to restructure their loan, such as increasing the overall term of the mortgage or switch to interest-only for up to six months, to ease the burden of higher payments. These options will not affect the borrower’s credit score.

Clydesdale Bank, part of Virgin Money group, is increasing fixed rate deals for new and existing customers at higher loan to values. The new rates, available through brokers, are effective from 8pm today (12 July). Fixed rates for remortgage customers at 75% and 80% loan to value will rise by 0.1 percentage points. The two-year remortgage fixed rate (80% LTV) is 6.6% with a £999 fee. Product transfer deals, for existing customers looking for a new fixed rate (residential and buy-to-let borrowers), will rise by 0.3 percentage points (two-year fix) and 0.2 percentage points (five-year fix). The bank has launched a new two-year fixed rate for remortgage, through brokers, at 6.03% and a five-year fix at 5.38% (65% LTV).

11 July: Average 2-Year Deal Highest For 15 Years At 6.66%

Barclays and NatWest are increasing the cost of selected fixed rates for new customers from tomorrow (12 July). It comes as bosses at a number of high street lenders were grilled earlier today by the Treasury Select Committee over high rates for borrowers, writes Jo Thornhill.

Both Barclays and NatWest have given notice to mortgage brokers today of their intention to increase fixed rates. Higher rates are expected to be unveiled tomorrow morning.

Moneyfacts says the average two-year fixed rate has hit 6.66%, up from 6.63% yesterday (10 July) and the highest level for short-term fixed rates in 15 years. It takes the cost of two-year fixed rates above the peak seen in October last year – when they reached 6.65% – after Kwasi Kwarteng’s mini-budget spooked the markets.

The average five-year fixed mortgage rate is at 6.17%, up from 6.13% yesterday, according to Moneyfacts.

This morning bank and building society bosses – Andrew Asaam from Lloyds Banking Group, Charlotte Harrison from Skipton building society, Bradley Fordham from Santander, Henry Jordan from Nationwide building society and Nigel Terrington of specialist lender Paragon Banking Group – met with the MPs to discuss mortgage and property markets.

They fielded questions from the Committee about high mortgage rates and potential arrears, falling property prices, problems for first-time buyers and issues in the buy-to-let market, among other concerns.

Committee Chair Harriet Baldwin MP asked about the significant rise in mortgage costs for borrowers and potential increases to arrears. But all the bank bosses said they were not seeing a particularly large jump in arrears.

Mr Fordham at Santander said the bank had seen a ‘small tick up in arrears’ but that levels were around 20% below pre-pandemic figures and 70% below 2009 post-financial crisis levels, and were considered by the bank to be ‘relatively low’.

The banks were asked about what longer term fixed rates they had available for remortgage customers, which could offer greater stability around payments. All responded that although 10-year fixed rates were available and in many cases were cheaper than short-term fixed rate equivalents, take up was low and customers preferred the flexibility of two-year fixed rates.

Dame Angela Eagle MP asked the panel why mortgage rates were so much more expensive than average borrowing costs in France and Germany.

Mr Assam of Lloyds said there were a number of factors involved but the main driver in recent months has been the rising funding costs due to higher swap rates – the interest rates the banks use to lend to each other in the wholesale markets.

Swap rates have spiked in recent months as markets expect the Bank of England Bank Rate will continue to climb, potentially reaching a peak of 6.5% this year.

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10 July: Virgin, HSBS Respond To Rising Wholesale Costs

Virgin Money is increasing selected fixed rates across its range – its third rate increase since the Bank of England raised interest rates on 22 June. It follows a further increase to fixed rates by HSBC, as lenders adjust to new market conditions, writes Jo Thornhill.

Swap rates – the interest rates at which banks lend to each other and which determine the cost of mortgages – climbed steadily last week with many economists now predicting the Bank of England Bank Rate could reach 6.5% this year (Bank Rate is currently at 5%).

Virgin’s rates will increase from tomorrow (11 July) on some of the bank’s most popular fixed rate deals for remortgage, home purchase and product transfers. A range of its buy-to-let fixed rates will also rise in cost.

The bank’s two-year fixed rates for remortgage will rise by 0.35 percentage points with new deals starting at 6.26%, while five-year rates are set to rise by 0.3 percentage points, with pay rates starting at 5.53%. Buy-to-let fixed rates for remortgage will increase by up to 0.35 percentage points to start at 5.36%.

Among product transfer deals – for existing Virgin customers looking for a new deal – its fixed rates will rise by up to 0.4 percentage points with new deals starting from 5.18%. Buy-to-let product transfer deals are also going up by the same amount with new deals starting at 5.53%.

However, the rate on the lender’s Freedom to Fix tracker has been cut by 0.02 percentage points and has a new start rate at 5.23% (it tracks at 0.23 percentage points above the Bank of England Bank Rate). This rate is available at 65% loan to value. Borrowers can choose to fix at any time with no penalty by switching to one of Virgin’s fixed rate deals.

HSBC has increased its most popular fixed rate mortgage deals by as much as 0.6 percentage points. The bank had already increased rates by up to 0.8 percentage points on 28 June.

Its two-year fixed rate for remortgage customers with 40% equity or deposit is 6.24% (up from 5.79% last week) and its five-year fixed rate is now priced at 5.84% (also 60% loan to value), up from 5.29% previously. Both deals charge a £999 arrangement fee.

For remortgage borrowers with 15% deposit or equity (85% LTV), HSBC’s two-year fixed rate is now 6.29% and its five-year rate is 5.89%. These deals come with a £999 fee.

The cost of buy-to-let borrowing has also gone up. Two-year fixed rates now start from 5.84% (60% LTV) with a £1,999 fee, or 6.63% with no fee. Five-year fixed rates with the same fee start from 5.39%, or 5.77% with no fee.

7 July: Lenders Continue To Reprice As Wholesale Rates Rocket

HSBC is increasing the cost of its fixed rate mortgages for new and existing customers from Monday (10 July) as it responds to ongoing turmoil in the markets, writes Jo Thornhill.

Swap rates – the interest rates at which the banks lend to each other and which help determine the price of fixed rate mortgages – have continued to climb over recent days. Many lenders have increased their fixed rates at least twice within a week.

HSBC notified brokers late yesterday (6 July) that it would be increasing fixed rates again for remortgage customers, first time buyers and existing customers looking for a product transfer deal. The bank will withdraw rates for new residential applications through brokers at 5pm today. Fixed rates for existing applications via brokers and direct applications will remain open until midnight on Sunday (9 July).

Buy-to-let rates and fixed rates for international residential purchase are also set to increase. It follows increases to HSBC’s fixed rates of up to 0.8 percentage points on 28 June.

The bank’s new fixed rates will be unveiled on Monday and they could be significantly higher than its current deals.

Nick Mendes, mortgage technical manager at broker John Charcol, said: “While the majority of high street lenders have already made substantial increases to their rates since the Bank Rate went to 5%, the past few days have seen a significant jump in swap rates. Different asset management firms have revised their expectations for further interest rate increases. JP Morgan has said rates could peak at 7%.

“Despite high street lenders sitting outside of the best buys, HSBC has made the decision to yet again increase rates. The question now is whether the other high street lenders will follow and increase their rates today.”

Here’s our round up of today’s rate changes. Keep coming back to this page to see which lenders have withdrawn products or increased their fixed rate deals:

Bath building society is increasing the rates on selected buy-to-let and holiday let mortgages from next Tuesday (11 July). Its five-year fixed rate BTL deal for limited company applicants will start from 6.39% and its five-year fix holiday let mortgage will start at 6.59%
Coventry building society has increased the cost of its tracker mortgage deals (these are rates that move in line with the Bank of England Bank Rate) for residential and buy-to-let borrowers. The mutual’s two-year residential tracker mortgage is now at 0.4 percentage points above Bank Rate giving a starting pay rate of 5.4% (65% LTV). It has a £999 fee. The equivalent two-year tracker for BTL borrowers is now at 0.6 percentage points above Bank Rate, giving a starting rate of 5.6%
Market Harborough building society is increasing its fixed rates from Tuesday (11 July). It has given notice to brokers of changes to its fixed rates after 5pm on Monday (10 July)
Molo, the specialist buy-to-let lender, is increasing all fixed rates from tomorrow (8 July). It is offering a two-year BTL fixed rate for individual and limited companies at 7.19%. Five-year rates start from 7.29%
Vida Homeloans is withdrawing its limited edition two-year fixed rate buy-to-let mortgage deal through brokers at 5pm today. Applications that are in process have until the close of the day on Monday (10 July) to be submitted
Lendco, buy-to-let and bridging loan provider, has withdrawn a range of its fixed rates and told brokers it will relaunch new deals next week at higher rates
Keystone, the specialist buy-to-let lender, has increased its fixed rates. The lender’s Classic range rates now start from 5.64% and rates in the complex ranges start at 6.74%. It has added a 5.5% arrangement fee on its five-year fixed rate classic range and has relaunched its expat and holiday let mortgage deals.

5 July: Higher Rates Come On Top Of Increases In June

Santander and Halifax, two of the UK’s biggest mortgage lenders, have both increased selected fixed rates again for new borrowers, writes Jo Thornhill.

Halifax has increased fixed rates again for remortgage customers – it follows two rounds of rate increases last week. And Santander previously increased its residential fixed rates for new customers – for remortgage and purchase – on 26 June.

Halifax is now offering a two-year fixed rate for remortgage at 6.21% or a five-year rate at 5.83%, both with a £999 fee (for loan to value ratios of between 60% and 85%). Fixed rates over 10 years start from 5.43%.

Santander has increased fixed rates for residential purchase by up to 0.36 percentage points, while remortgage fixed rate deals have gone up by up to 0.33 percentage points.

It is offering a two-year fixed rate for remortgage at 5.94% and a five-year deal at 5.39%. Both deals require a 25% deposit or equity in the property and charge a £999 arrangement fee.

At the same time Santander has increased its fixed rates for buy-to-let purchase and remortgage by up to 0.37 percentage points.

Accord Mortgages, part of Yorkshire building society, is increasing the cost of its product transfer fixed rates (deals available to existing customers looking for a new rate) and rates for additional borrowing. Most fixed rates will rise by up to 0.2 percentage points. Fixed rates at higher LTVs (90% LTV and higher) will rise by up to 0.3 percentage points. Current rates, available through brokers, will be withdrawn at 8pm today with new fixed rates available tomorrow (6 July). Accord increased rates for new customers by up to 0.56 percentage points on 29 June
Aldermore is withdrawing its limited edition buy-to-let product at 6pm tomorrow (6 July). Brokers have been given notice to get all applications for this five-year fixed rate BTL deal in by this time.

4 July: TSB Unveils Second Increase In A Week

TSB is increasing the cost of its fixed rate mortgage deals, as research shows the average five-year fixed rate has risen above 6%, writes Jo Thornhill.

TSB will raise the price of a range of its fixed rates for residential and buy-to-let customers, available through brokers, from tomorrow (5 July). It follows the bank’s increase of up to 0.35 percentage points to its fixed rates on Wednesday last week (28 June).

Its two-year fixed rate for home purchase or remortgage will increase by up to 0.4 percentage points. New rates will be released tomorrow morning, but TSB’s current two-year fixed rate for remortgage borrowers with at least 40% equity or deposit is 5.74% with a £995 fee.

Two and five-year fixed rates for product transfer (rates available to existing TSB borrowers looking for a new deal) and two-year fixed rates for additional borrowing will also rise by up to 0.4 percentage points.

Two and five-year fixed rates for buy-to-let customers (both new business and existing customers looking for new deals) are set to rise by up to 0.6 percentage points. Currently TSB’s five-year fix for BTL remortgage is 5.24% with a £995 fee ( 60% LTV).

Fixed rate mortgages have continued to climb following the Bank of England’s decision last month to raise interest rates from 4.5% to 5%. Many pundits now believe rates could rise even higher this year.

Average five-year fixed rate residential deals are now at 6.01% (up from 5.97% yesterday), while average two-year fixed rates are at 6.47%, according to data compiler Moneyfacts.

The average standard variable mortgage rate is 7.67%.

The last time the average five-year fix was above 6% was on 21 November last year, according to Moneyfacts. This occurred in the wake of the Autumn mini budget, which caused turmoil in the markets and led to a rapid increase in the cost of borrowing.

Saffron building society has unveiled its new mortgage rates after it withdrew products from the market on Friday last week (30 June). Its mortgage deals for self-employed workers at 80% LTV have increased. The two-year fixed rate is 6.77% and the five-year fix is 6.67%, for example. And selected buy-to-let rates have gone up. Its five-year fixed rate BTL at 75% LTV is now 6.37%. The five-year fix for limited company BTL borrowers (75% LTV) is 6.57%
Platform, the specialist lending arm of Co-operative Bank, is increasing fixed rates for new business from Thursday (6 July). It has a two-year fixed rate deal for residential remortgage at 5.78% (60% LTV) with a £999 fee, the equivalent five-year fixed rate is at 5.25%
Precise Mortgages, the specialist buy-to-let lender, is withdrawing its residential and BTL range at 8pm today (4 July). New rates will be launched tomorrow (5 July).

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3 July: Fixed Mortgage Rates Under Sustained Pressure

Coventry building society and a number of smaller lenders are increasing the cost of fixed rate mortgages for new and existing customers looking for a new deal, writes Jo Thornhill.

The moves follow increases by major lenders last week including Halifax, HSBC, Santander, Nationwide, TSB, NatWest and Virgin Money (see stories below).

The interest rates at which the banks lend to each other in the wholesale markets – so-called swap rates – continued to climb last week, obliging most lenders to reprice their fixed mortgage rates at least once, with some tweaking rates a number of times at short notice.

The two-year swap rate, which was at 5.775% on Thursday last week (29 June) is at 5.865% today. The five-year rate has inched up from 4.952% to 5.022% over the same time frame.

Coventry is withdrawing its two, three and five-year fixed rate deals available through brokers from 8pm tomorrow (Tuesday 4 July) and will relaunch a new range, with higher rates, on Wednesday (5 July).

Its rate increases will affect new customers looking to remortgage, existing customers who are ‘porting’ their mortgage because they’re moving home, and existing customers looking for a product transfer deal or to borrow more on a further advance.

Two and five-year buy-to-let fixed rates for new customers and existing customers looking for a product transfer are also set to rise.

Among other lenders announcing changes are:

Principality building society: rates are increasing by up to 0.5 percentage points on two, three and five-year fixed rates for new residential customers. Its two-year fixed rate deal for borrowers with a 5% deposit or equity (95% loan-to-value) is being removed from sale. The lender is reintroducing its five-year fixed rate at 95% LTV. Buy-to-let fixed rates are also increasing
Halifax increased its fixed rates again over the weekend – the second time in less than a week. Its two-year fixed rate at 60% LTV is now 5.58% with a £999 fee. It is offering a 10-year fixed rate at 5.5% with no fee (also 60% LTV)
Clydesdale Bank, part of Virgin Money, has increased fixed rates for residential and buy-to-let customers (both new and existing) by up to 0.66 percentage points (effective from 8pm today). Fixed rates with £500 cashback, for remortgage customers, will be increased by up to 0.50 percentage points, now starting from 5.48% (65% LTV)
Family building society: all fixed rates for residential owner-occupier mortgages available through brokers have been withdrawn. New rates have not yet been launched
MPowered Mortgages: rates have been increased across the lender’s five-year fixed rate residential products for new business available through brokers. The lender is offering a five-year fixed rate at 5.49% (75% LTV) with a £999 fee
Skipton International: fixed rates for new buy-to-let customers, available through brokers, are set to rise from this Thursday (6 July). Its five-year BTL fixed rate will increase by 0.3 percentage points to start at 6.29%.

29 June: Halifax, Virgin, NatWest Latest To Hike Rates

Major lenders are continuing to increase the cost of borrowing as the market remains volatile, writes Jo Thornhill.

Halifax, the UK’s biggest lender, has increased its fixed rates across the board. Its two-year and five-year fixed rates for remortgage customers (at 60% LTV) are now priced at 5.51% (up from 5.36%) and 5.12% (up from 4.89%) respectively. Both deals have a £999 fee.

Virgin Money has announced its second increase to fixed rates in less than a week. The bank will raise selected residential and buy-to-let rates (BTL) for new and existing customers from 8pm this evening.

It has said its two-year fixed rates for remortgage will increase by 0.1 percentage points with deals starting from 5.91%, and selected five-year fixed rates will rise by 0.08 percentage points, starting at 5.23%. Two-year fixed buy-to-let rates for new customers will rise by 0.1 percentage points, starting at 5.47%.

Selected product transfer fixed rates, for existing customers looking for a new deal, will also rise by up to 0.15 percentage points. It follows a rate rise by Virgin of 0.15 percentage points to a range of its fixed rate deals on Monday this week.

NatWest is increasing fixed rates for new and existing customers and buy-to-let borrowers, effective from tomorrow (30 June).

Among the increases are rate hikes of up to 0.35 percentage points for purchase deals and up to 0.29 percentage points for remortgage deals. Its two-year fixed rate for remortgage (75% LTV) will be 6.21% with a £995 fee, for example, and its equivalent five-year fixed rate will be 5.84%.

A number of smaller lenders have also announced either a withdrawal of mortgage deals, or an increase to fixed rates:

Bank of Ireland has increased the cost of all buy-to-let (BTL) fixed rate deals effective from tomorrow (30 June). It will now offer a two-year fixed rate at 6.15% and a five-year fix at 5.7% (both with a £995 fee and at 75% loan to value)
Saffron building society is withdrawing a number of products across its self-employed, owner occupied and BTL ranges from 5pm tomorrow (30 June). New rates will be launched on Saturday (1 July). The lender’s two-year fix at 80% LTV for self-employed borrowers will rise from 5.67% to 6.77%. Its standard (owner occupied) two-year remortgage deal at 80% LTV will rise from 4.69% to 4.99% (these deals all have a £999 fee)
Loughborough building society has announced the withdrawal of a selected range of its mortgage deals through brokers from the end of Monday (3 July). Withdrawn products include its five-year fixed rate deal under the First Homes scheme, its five-year fixed rate shared ownership deal, and its five-year fixed rate under the Deposit Guarantee scheme.

The average two-year fixed rate across the market is now priced at 6.37% and the average five-year fix is 5.94%, according to Moneyfacts.

28 June: Lenders Respond To Market After Bank Rate Hike

HSBC and Nationwide have announced big increases to their fixed mortgage rates, piling more pain on beleaguered borrowers, writes Jo Thornhill.

Nationwide building society will increase its fixed rates by up to 0.35 percentage points from tomorrow (29 June). This includes fixed rates for new customers and existing customers looking to switch to a new deal, as well as those looking for additional borrowing and home movers.

Earlier today HSBC unveiled its new fixed rate mortgage range, which includes large increases to the rates on its popular two and five-year fixed rate remortgage deals. Two-year fixed rates for new customers have been increased by up to 0.8 percentage points, for example.

The bank offered market-leading fixed rates until yesterday, but following the Bank of England interest rate rise last week, and due to the high demand for its relatively low fixed rates, HSBC announced yesterday it would be increasing all fixed rates.

HSBC’s two-year fixed rate for remortgage borrowers (at 60% LTV) is now 5.79% (up from 4.99%) while its five-year rate (also 60% LTV) is 5.29% (up from 4.56%). Both deals have a £999 arrangement fee. Fixed rates at higher LTV ratios have seen similar increases.

It has also increased two, three and five-year fixed rates across the board, including for first time buyers, home purchase and home movers, buy-to-let and international mortgages, plus existing customers looking to borrow more.

For example, its two-year fixed rate for home movers (80% LTV) is at 5.79%. The same deal for three years is priced at 5.59%, or 5.39% over five years – all deals have a £999 fee. Existing customers looking to switch to a new deal (product transfer rates) can get a two-year fixed rate at 5.38% or a five-year fix at 4.99% (both have £999 fees). And remortgage deals for new buy-to-let customers (60% LTV) include a two-year fixed rate at 5.54% or a five-year fix at 5.19% (£1,999 fees apply).

Nick Mendes, mortgage technical manager at online broker John Charcol, said: “It’s a bitter blow for mortgage holders trying to secure a remortgage deal.

“Mortgage rates are now much higher than many households will have experienced before. Homeowners currently approaching the last seven months of their fixed rate or currently on a variable rate should take action quickly or risk the prospect of needlessly paying a much higher rate.”

Other lenders continue to reprice their fixed rate deals upwards in reaction to the Bank of England interest rate rise.

Accord Mortgages, part of Yorkshire building society, is increasing selected fixed rate deals by up to 0.56 percentage points from tomorrow (29 June). Current deals remain available until 10pm this evening. Accord will also launch a five-year fixed rate offset mortgage with rates starting from 5.75% (60% LTV) and with a £1,495 fee.

Bank of Ireland (BoI) is withdrawing residential rates available through brokers under its Bespoke mortgage arm from 6pm today (28 June). The Bespoke range offers more flexible criteria than BoI’s standard mortgage range.

27 June: TSB Joins Throng Of Lenders Hiking Cost Of Borrowing

HSBC is increasing the cost of its fixed rate mortgages from tomorrow (28 June), following Santander, Virgin Money and TSB, writes Jo Thornhill.

A spokesperson at the bank said: “We’re firmly focused on supporting customers in the current environment, but, like other banks, we have to reflect significant market movements in our mortgage rates, and these are changing from tomorrow.”

Product transfer deals for existing HSBC customers, international applications and buy-to-let rates through brokers will be available at current rates until midnight tonight (27 June). Current rates for new residential applications through brokers – for purchase and remortgage – will be available only until 5pm today.

TSB has said it is increasing the cost of its two and five-year fixed rates for purchase and remortgage by up to 0.35 percentage points from tomorrow (28 June). Buy-to-let rates, product transfer deals and additional borrowing fixed rates will also increase at the same time, by up to 0.3 percentage points.

The bank’s two-year fixed rate for remortgage will start from 5.74% (60% LTV) and five-year remortgage rates from 5.34% (60% LTV).

Nick Mendes, mortgage technical manager at broker John Charcol, said: “HSBC has taken four times the normal level of business in the last few days due to its highly competitive fixed rates, but this is putting pressure on service levels.

“Summer holiday season is almost upon us, and the bank is clearly trying to balance the extra workload with a reduced capacity to process applications.

“With Santander withdrawing its deals yesterday (see story below) HSBC simply had no choice. It will want to avoid sitting on the top best buys for the next few weeks while it manages its current workload.”

Santander and Virgin Money both increased the cost of their fixed rate mortgages yesterday. Other leading lenders are expected to follow suit in the coming days as the market settles following last week’s interest rate rise by the Bank of England.

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26 June: Santander And Virgin Money Announce Further Hikes

Santander and Virgin Money, two of the market’s biggest mortgage lenders, are increasing the cost of home loans following last week’s interest rate rise, writes Jo Thornhill.

Santander is increasing residential fixed rates on remortgage deals by up to 0.46 percentage points, and on purchase deals by up to 0.25%.

The bank is also pulling all of its two- and five-year fixed rate deals at 60% loan to value – although its three-year fixed rate will still be available.

Buy-to-let fixed rates will rise by up to 0.42 percentage points.

To secure current rates, mortgage applications must be submitted by 10pm tonight with new rates kicking in tomorrow.

There will be no change to the bank’s standard variable rate (SVR), currently pegged at 7.5%.

Virgin Money quickly followed suit, announcing it will increase its fixed rates from 8pm this evening.

Fixed rates for residential remortgages will rise by up to 0.15 percentage points, with five-year fixed rates now starting from 5.15%.

Virgin has also increased fixed rates for buy-to-let borrowers by up to 0.15 percentage points, with five-year rates starting from 5.05%.

Product transfer deals – those rates available to existing Virgin customers looking for a new deal – will also rise by up to 0.15 percentage points. The lowest five-year fixed rate for product transfer will start at 5.01%.

Virgin’s SVR, at 8.74%, is so far unchanged. It is one of the highest SVRs in the market.

The cost of borrowing has soared in recent weeks as lenders have pushed up their fixed mortgage rates in anticipation of higher interest rates.

The average two-year fixed mortgage rate is now around 6.23%, according to data compiler Moneyfacts – a seven month high. By comparison, average two-year fixed rates stood at 5.26% last month after the Bank of England’s Bank Rate decision.

Average five-year rates are now at 5.86%, compared to 4.97% in May.

23 June: Downing St Summit Follows Shock Bank Rate Hike

Mortgage lenders have agreed to offer greater flexibility to customers who are struggling with mortgage payments, and will wait 12 months before repossessing homes, following an emergency summit meeting with the Chancellor, Jeremy Hunt, today, writes Jo Thornhill.

Mr Hunt summoned bank bosses from HSBC, Barclays, Lloyds, Nationwide, NatWest, Santander and Virgin Money to the crisis summit, along with Nikhil Rathi, head of the Financial Conduct Authority, following the shock rise in the Bank of England Bank Rate from 4.5% to 5% yesterday.

There is widespread concern among charities and consumer groups that rising interest rates are putting increased pressure on households and that this could lead to far bigger numbers facing financial distress and hardship.

Under the arrangements agreed today:

borrowers will be able to switch their mortgage to interest-only for up to six months, reducing monthly payments
the term of a mortgage can be extended (for example a 25-year mortgage term could be extended out to 40 years) for up to six months, reducing monthly payments
borrowers can talk to their lender about possible changes to their mortgage arrangements without judgment or repercussions.

These options can be taken with ‘no questions asked’ and none of the above will require new affordability checks or affect the borrower’s credit record or score.

But the options are intended only as temporary measures to help reduce mortgage costs in the short-term and borrowers will usually need to switch back to their previous mortgage terms after six months.

In addition, for borrowers falling behind with repayments, it was agreed that customers would not be forced to have their homes repossessed within 12 months from their first missed payment.

Ordinarily repossession action can sometimes start within a matter of a few months of missed mortgage payments, depending on the circumstances.

Similar arrangements were put in place during the Covid 19 pandemic when there was a pause on all home repossessions.

Lenders have been told they should also offer ‘tailored support’ on a case by case basis, which could involve giving a borrower a total break on mortgage payments, known as a mortgage holiday, for a short period, if this is likely to be helpful.

But borrowers taking this option need to be aware this will negatively affect their credit record and could impact on their ability to borrow in future.

A report published by the National Institute for Economic and Social Research this week found that average monthly mortgage repayments will jump by almost 50% – this is above the typical stress-test households are subjected to when applying for a mortgage.

It also found the average fixed rate monthly repayment will rise from £700 to £1,000. This will affect up to two million borrowers who need to remortgage this year.

The research group concluded one million more households will be left ‘insolvent’ (with no savings) this year as a result of paying higher mortgage bills, taking the total proportion of households with no savings to 7.8 million (30%).

The FCA has already been working with mortgage lenders over the past year to ensure they offer flexibility and greater forbearance to any households who might be struggling as a result of rising interest rates and the increased cost of living.

It published guidance to help lenders dealing with borrowers in financial difficulty in March last year and says its Consumer Duty regime, which comes into place at the end of July, will further strengthen support for customers to ensure they are treated fairly.

Mr Rathi said: “Today’s productive meeting builds on the work we’ve done over the last year to ensure those who get into difficulty receive the tailored support they need. We’ll move quickly to make any changes needed to support today’s commitments.”

Nick Mendes, mortgage technical manager at broker John Charcol, said the measures could have gone further: “It’s a positive step forward and will provide some mortgage-holders a short period of relief. But it looks like a deal which goes against the Bank of England’s policy to reduce inflation.

“It also would have also been encouraging to see some help for landlords as they also face higher costs on buy-to-let loans, which in turn is putting pressure on tenants.”

22 June: Lenders Keep Powder Dry After Bank Rate Hike

Lenders are expected to react in the coming days to the Bank of England’s latest rate rise by increasing the cost of their mortgage deals and standard variable rates. But some early movers are showing restraint in welcome news for borrowers, writes Jo Thornhill.

The Bank increased its main lender rate from 4.5% to 5% earlier today. With some exceptions, most variable rate and tracker mortgage holders will feel the effect from their next scheduled payment.

Those on fixed rates will face higher rates when their current arrangement expires.

In a welcome move for some of its variable rate customers, Santander says it will not increase its standard variable rate (SVR), currently at 7.5%. Customers on tracker rate deals will see their rate rise from the start of August.

Skipton building society says it is increasing its mortgage variable rate (MVR) but only by 0.25 percentage points (not the 0.5 percentage point increase announced by the Bank of England today).

Skipton borrowers paying the MVR will see their rate rise from 6.54% to 6.79%.

Last month Skipton did not pass on any of the May interest rate rise to its mortgage variable rate customers. Skipton’s MVR is equivalent to a lender’s SVR. It is the rate borrowers revert to after a fixed rate or tracker deal ends if they do not switch to a new fix or tracker deal.

In reality relatively few borrowers are on their lender’s SVR compared to fixed rates, as SVRs tend to be much higher than the average fixed rate deals in the market.

According to the Financial Conduct Authority around 1.9 million homeowners are paying variable rates, although this includes tracker and discounted rate deals as well as SVR.

UK FInance, a banking industry trade body, puts the number of standard variable mortgages at 773,000.

Leeds building society has increased the cost of selected fixed rates including some shared ownership deals. Its three-year fixed rate for residential remortgage has been withdrawn.

22 June: Millions Face Steep Increase At End Of Fixed Rate Deals

Borrowers are braced for more bad news at lunchtime today as the Bank of England is expected to raise interest rates, writes Jo Thornhill.

If rates go up it will be the 13th consecutive rate rise by the Bank since December 2021 and will pile misery onto millions of mortgage borrowers coming to the end of cheap fixed rates.

According to debt charity Step Change, 45% of mortgage holders – almost seven million adults – have found it difficult to keep up with bills and credit commitments in the last few months.

NatWest, one of the biggest lenders, is increasing the rates on product transfer deals – those rates on offer to existing customers coming to the end of a deal – by up to 0.75 percentage points. Existing customers can bag a two-year fix at 5.64% or a five-year fix at 5.24%, but only if they have at least 25% equity in the property.

The bank has also increased its fixed rates for new customers by up to 0.3 percentage points from this morning.

Borrowers looking for a remortgage with the bank are facing two-year fixed rates at 5.94% or five-year fixed rates at 5.64%, and again that’s only if they have at least 25% equity in their property. Rates are higher for those with less equity.

TSB has also increased rates for new and existing customers by up to 0.4 percentage points. Its two-year fixed rate remortgage deal is now priced at 5.54% (60% LTV) and its five-year fix is 5.04%.

The Bank of England’s Monetary Policy Committee (MPC) will announce its latest decision on interest rates at 12 noon today. The benchmark Bank Rate is currently at 4.5%.

Nick Mendes, mortgage technical manager at online broker John Charcol, says the markets are already responding negatively to yesterday’s inflation figures (inflation has remained at 8.7%, unchanged on the previous month). There is growing concern that the Bank of England seems to be unable to bring inflation down as quickly as had been hoped.

Mr Mendes said: “My expectation is we’ll see lenders provide forward notice of rate increases rather than product withdrawals today, tomorrow and into the weekend. Most lenders have already priced in a rate rise today, but the Bank Governor’s notes following the MPC meeting will drive market sentiment, either positively or negatively, so we’ll have to wait and see.”

The Mortgage Lender is increasing borrowing costs for residential and buy-to-let customers with new rates, available through brokers, to be launched tomorrow (23 June)
Accord Mortgages, the specialist lending arm of Yorkshire building society, is increasing rates on its buy-to-let product transfer range (for existing customers looking for a new deal) by up to 0.47 percentage points. The new rates will be live from tomorrow (23 June)
Clydesdale Bank, part of Virgin Money, has launched new fixed rate deals today for residential and buy-to-let borrowers, including a range of exclusive deals through brokers. Fixed rates for remortgage at 75% LTV start from 5.28%. Buy-to-let fixed rates at 60% LTV start from 5.57%. Product transfer deals, for existing customers looking for a new rate, have been increased by up to 0.4 percentage points.

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20 June: Lenders Anticipate Rise By Increasing Rates

Virgin Money is increasing the cost of borrowing for new customers and existing ones looking for a new deal, as pressure continues to build in the home loan market, writes Jo Thornhill.

The Bank of England will announce the last Bank Rate decision at noon on Thursday, with most commentators expected a rise of at least 0.25 basis points from its current level of 4.5%.

Virgin says selected rates will increase from 8pm today. Its two-year fixed rates for new customers will increase by up to 0.6 percentage points and deals will start at 5.66%. Five-year fixed rates will increase by up to 0.4 percentage points and will start from 5.1%. These rates are available through brokers.

Buy-to-let fixed rates will also increase – by up to 0.35 percentage points for two-year fixes and up to 0.3 percentage points for five-year fixed rates.

The rates on deals for existing Virgin Money customers looking for a product transfer are also going up. Two-year fixed rates are increasing by up to 0.42 percentage points and will start at 5.47% and five-year fixed rates are rising by 0.38 percentage points and will start from 4.96%.

TSB has also said it will increase the cost of borrowing with higher rate deals, available through brokers, being launched tomorrow (Wednesday 21 June).

The bank is increasing two and five-year fixed rates for purchase by up to 0.4 percentage points and the same fixed rates for remortgage by up to 0.25 percentage points. Product transfer rates, for existing customers looking to switch deals, will also rise by up to 0.25 percentage points.

Santander has bucked the recent trend of serial rate increases by major lenders by announcing that it is holding its mortgage rates. It follows increases across its product range last week when deals rose in cost by up to 0.65 percentage points.

19 June: Fixed Rate Customers Facing Hikes When Deals End

Lenders are continuing to announce to withdraw existing deals and launch higher fixed and tracker rates as borrowers brace for another rise in interest rates by the Bank of England on Thursday (22 June), writes Jo Thornhill.

Recent increases to fixed mortgage rates across the market mean that borrowing costs have soared for those on variable rates and those looking to remortgage or switch to a new deal.

It is thought over 500,000 people will come to the end of their fixed rate mortgage deals during the remainder of 2023.

According to online mortgage broker Better, the average two-year fixed rate is now at 5.39% and the average five-year fix is 4.96%.

Sir Howard Davies, chairman at NatWest and a former Bank of England deputy governor, has said he feels the Bank of England could “wait a bit” and not increase the Bank Rate again this week when the Monetary Policy Committee meets to decide on rates.

Speaking to Radio 4 over the weekend, Mr Davies said: “’In the past when we’ve had significant rises in interest rates – say, before the last financial crisis – the mortgage market in this country then was largely variable rate. So, when the interest rate went up, by the end of the following month everybody was paying more on their mortgages.

‘Now we have a mortgage market where most people are on a fixed rate. Therefore, when you put up interest rates, for a while you don’t have much impact, because you only have an impact on the small number of people paying variable rate, and on the people whose fixed rate just happens to come up at that point for renewal.

“So, it’s arguable that the interest rate rises that we’ve already seen have not yet fed through [and had an impact] on consumer spending.’

Here’s our latest round-up of lender rate announcements and changes:

Coventry building society is removing all residential and buy-to-let deals available through brokers from 8pm today (19 June). It will launch new, higher rates from tomorrow morning
Accord Mortgages, part of Yorkshire building society, is withdrawing all residential and buy-to-let deals through brokers at 10pm today (19 June). New rates will be launched tomorrow morning. The mutual lender has said a small number of products will not be replaced
Kent Reliance building society has withdrawn buy-to-let mortgage deals available through brokers at 75% loan to value. Products at 80% LTV remain unchanged and available
Specialist lender Precise Mortgages is withdrawing buy-to-let deals at 75% loan to value. Products at 80% LTV remain unchanged and available.

15 June: Nationwide To Increase Rates Tomorrow

Major mortgage lender HSBC is increasing the cost of fixed rate deals through brokers by up to 0.35 percentage points, writes Jo Thornhill.

The bank, along with a clutch of other lenders, has repriced its fixed rate offers in recent days to reflect changing market conditions. This latest hike is the second time HSBC has increased its rates in less than a week.

Lenders are pulling their fixed and tracker rate offers at short notice to reprice higher as swap rates (the interest rates banks use to price their fixed mortgage rates) have risen rapidly ahead of an expected increase in the Bank of England Bank Rate next week..

The Bank Rate – currently 4.5% – is expected to rise to 4.75% or even 5% when the Bank’s monetary policy committee meets on Thursday (22 June). Economists are predicting it will rise to 5.5% by the Autumn.

HSBC’s higher rates, through mortgage brokers, apply to new customer residential, buy-to-let, first-time buyer deals as well as to product transfer rates for existing residential and buy-to-let mortgage customers.

It is offering a two-year fix for home purchase at 85% loan to value at 5.64% – 0.2 percentage points higher than yesterday. Its five-year fixed rate for new remortgage customers is now 4.88% (60% LTV) – up 0.24 percentage points.

The two-year product transfer rate for existing customers looking to switch is 4.99% (60% LTV) – up 0.27 percentage points. Buy-to-let rates have increased by up to 0.35 percentage points.

An HSBC spokesperson said: “Our focus remains to support customers through current pressures and providing access to good deals. However, over recent days the cost of funds has been increasing and, like other banks, we have to reflect that in our mortgage rates.”

Nationwide is increasing the cost of fixed rates for new business and existing customers looking to transfer to a new deal, by up to 0.7 percentage points from tomorrow (16 June).

The building society’s two-year fixed rate deal for remortgages will be priced at 5.74% (60% LTV) or 5.25% for a five-year fix. Both deals have a £999 fee.

The increases follows hikes of up to 0.25 percentage points to fixed rates by the lender last week.

Clydesdale Bank has also announced it is removing all new business products from sale at 5pm today and will relaunch next week. Product transfer rates for existing customers remain available.

Bath and Family building societies withdrew mortgage products from the shelves yesterday (14 June) and are expected to launch new repriced rates in the coming days.

14 June: Coventry, Santander Adjust Offers As Fears Grow

HSBC is increasing the cost of mortgage borrowing – its second rate rise in a week – against a backdrop of predictions that the Bank of England could raise base interest rates from 4.5% to 5% next week, writes Jo Thornhill.

The HSBC move will affect new customers and existing ones looking for a new product when their existing one comes to an end, or otherwise seeking a remortgage.

Its two- and five-year fixed rates for remortgage and product transfer (for existing customers looking for a new deal), plus its first-time buyer, home mover and buy-to-let fixed rates will increase from tomorrow (15 June).

Current rates will be withdrawn from the market at 5pm today.

The lender relaunched its fixed rate range for new business on Monday after temporarily pulling out of the broker market at the end of last week.

Coventry building society is also withdrawing rates for new residential and buy-to-let customers along with product transfer deals for existing customers. It is also suspending the sale of tracker deals indefinitely from 8pm tomorrow (15 June).

It will launch its new range of deals on Friday morning, with brokers saying they are braced for higher rates.

Santander has relaunched its range this morning after pulling out of the market for new residential and buy-to-let deals on Monday. Some fixed rates have increased by up to 0.65%.

It is offering a five-year fixed rate at 4.83% (60% LTV) with a £999 fee. But with the market so volatile brokers predict the bank could increase rates again.

Nick Mendes at broker John Charcol, said: “Markets now expect the Bank of England will raise interest rates by half a percentage point to 5% next week.

“We’ve seen big leaps in swap rates reflecting this sentiment. I’d be surprised if any lender could now afford to offer a two or five-year fixed rate at under 5%.”

Swap rates are the interest rates at which the banks lend to each other, and are used by banks and building societies to price the fixed mortgage rates they offer their customers.

The Bank of England’s Monetary Policy Committee is due to meet next Thursday (22 June). Earlier this week, MPC member Jonathan Haskel said he couldn’t rule out the possibility of two more rate rises this year as the Bank tried to combat stubbornly high inflation.

Specialist lenders MPowered Mortgages, Fleet Mortgages and Lendco are withdrawing fixed rate deals available through brokers at 5pm today. Both MPowered and Fleet will launch new rates from tomorrow (15 June) while Lendco has said it expects to return to the market “in the coming days”.

13 June: Skipton Increase To Reduce Borrowers’ Maximum Loans

Skipton building society is raising the cost of its no-deposit 100% mortgage for first-time buyers but the deal remains available at current prices until Friday, writes Jo Thornhill.

The mutual lender’s Track Record product, a 100% mortgage deal which launched last month, is a five-year fixed rate deal at 5.49%. This rate will be available until 10pm on Thursday (15 June) so borrowers need to act fast if they want to secure this deal.

Skipton says the rate will rise to 5.89% on Friday (16 June).

The rate increase also means the maximum loan a first-time buyer can borrow through the deal will reduce.

This is because the Track Record loan is structured so that the monthly mortgage payments cannot be more than the average of the last six months’ rental costs the applicant has paid.

Track Record borrowers must have a minimum 12-months’ rental payment history. If average monthly rent has been £800, for example, monthly mortgage repayments cannot exceed £800. At a higher fixed interest rate, this means first-time buyers will have to borrow less.

Nick Mendes at broker John Charcol said: “Although the increased rate will reduce maximum borrowing for applicants, the way affordability is calculated has limited how much the first-time buyer can borrow in any case. This product generally suits potential buyers outside of the south east of England.

“While there has been interest in Skipton’s product, in all cases we’ve seen borrowers haven’t taken up the deal in the end when they realise they can’t borrow enough to purchase a property of a similar standard to the one they occupy as a tenant.”

Virgin Money is increasing the cost of fixed rate mortgages for new customers from 8pm this evening (13 June). New remortgage fixed rates and buy-to-let fixed rates will rise by up to 0.12 percentage points. The new five-year fixed rate for remortgage at 65% loan to value will rise to 4.71% from 4.6%. Product transfers – deals for existing customers looking for a new mortgage deal – will also rise by 0.12 percentage points. The five-year fixed rate for product transfer will start from 4.58% (65% LTV).

12 June: Santander To Pause New Business Sales, TSB Cuts Rates

HSBC has returned to the mortgage broker market with increased rates on its remortgage products following its temporary withdrawal last week, writes Jo Thornhill.

Among its new deals HSBC is offering a two-year fixed rate for remortgage at 4.99% (60% LTV) and a five-year fix (60% LTV) at 4.64%. Last week these same deals, which both have a £999 fee, were priced at 4.84% and 4.34% respectively.

The bank, the sixth largest lender by market share according to UK Finance, withdrew products for new customers available through brokers last Thursday due to a spike in swap rates – the interest rates at which the banks lend to each other.

Swap rates are used by lenders to price their fixed rate mortgage deals.

The cost of fixed rate deals for buyers has also been increased by up to 0.25 percentage points. HSBC’s two-year fixed rate for home purchase (85% LTV) is now 5.19% (£999 fee) – up from 4.94% last week.

An HSBC spokesperson said: “The cost of funds has been increasing and, like other banks, we have to reflect that.”

Bucking the trend of increased rates, TSB is reducing the cost of selected two and five-year fixed rate mortgages and some tracker loans by up to 0.4 percentage points from tomorrow (13 June). The rate falls will apply on remortgage, house purchase and product transfer (for existing TSB customers) deals and also on some buy-to-let mortgages. Brokers say the bank is looking to grab some market share but that the lower rates are not likely to stick around for long.

Santander announced today that it was pulling all mortgage products for new business through intermediaries at the end of today (Monday). The lender says it will come back to market on Wednesday (14 June). Brokers expect deals to be repriced higher.

It comes as the Centre for Economics and Business Research has published data showing that the combined cost of increased interest rates is likely to cost borrowers in the region of £9 billion in extra mortgage payments in 2023 and 2024.

Nick Mendes, technical mortgage manager at broker John Charcol, said: “With lenders across the market making changes to pricing, other lenders find themselves at the top of the list in terms of best rates which isn’t a favourable place to be – especially during a period in which costs of funds are increasing.

“Being the cheapest on the market means a lender can quickly become overwhelmed, which affects service levels. We are expecting more lenders to make short-term adjustments to their pricing, which means a difficult time ahead for homeowners looking for a new deal and trying to decide what to do.”

NatWest is increasing mortgage rates for new and existing customers as well as buy-to-let borrowers and shared equity mortgages. The new rates are effective tomorrow (13 June). Two and five-year fixed rate deals for residential new purchase, including first-time buyer deals, and remortgage will rise by 0.2 percentage points. Two and five-year product transfer deals for existing customers will rise by up to 0.35 percentage points. Buy-to-let remortgage fixed rates will rise by up to 1.24 percentage points
Clydesdale Bank is increasing rates for existing customers (product transfer deals) by up to 0.3 percentage points from 8pm today (12 June). Tomorrow (13 June) the lender will relaunch its fixed rate mortgage range for new customers. It is expected the rates will increase by a similar margin to those for existing customers. The deals for new business were withdrawn at the end of last week.

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9 June: Clydesdale, Saffron Withdraw Products As Rates Rise

Clydesdale Bank – part of Virgin Money group – and Saffron building society have both withdrawn mortgage products for new customers as market jitters continue, writes Jo Thornhill.

It follows the action of HSBC yesterday (8 June) which saw the lending giant pull all mortgage deals for new business with immediate effect.

Mortgage brokers described the market as being in a ‘state of frenzy’.

Lenders are removing deals from the market at short notice and repricing fixed rates higher as swap rates – the interest rates at which banks lend to each other – have risen sharply in recent days. Lenders use swap rates to price their own fixed rate mortgage deals for customers.

HSBC and Clydesdale will relaunch their fixed rate offerings next week, but brokers are expecting new deals to be priced at ‘much higher rates’.

Saffron building society has also withdrawn a range of its fixed rate mortgage deals today, including 5% deposit deals for first-time buyers and some buy-to-let mortgages.

8 June: Market Pitched Into ‘Frenzy’ Over Rising Interest Levels

The mortgage market continues to be highly volatile with lenders pulling deals at short notice and new products being priced much higher, writes Jo Thornhill.

Mortgage brokers describe a ‘frenzy’ in the market and say conditions are extremely difficult for borrowers looking for a new mortgage deal.

HSBC is pulling all new customer residential and buy-to-let mortgage deals at the end of today and will relaunch new products on Monday (12 June). The bank has said rates across all loan-to-value ratios will be increasing.

At the same time, HSBC is increasing its standard variable rate (SVR) for buy-to-let customers from 7.10% to 7.35%. The bank’s residential SVR is 6.99% and there are no plans to increase it.

Nationwide building society has increased its fixed rate across its mortgage range for new and existing customers looking for product transfer deals by up to 0.25 percentage points from tomorrow (9 June). The lender’s tracker deals are set to increase by up to 0.85 percentage points.

It follows the withdrawal of mortgage products and increased rates across the market over the past two weeks as lenders reacted to April’s higher than expected inflation figures.

Swap rates, the interest rates at which the banks lend to each other and which they use to price fixed mortgage rates for customers, have spiked today and the market remains highly volatile.

Two-year swap rates have risen to 5.052% from 5.101% in the last two days. On 9 May they were at 4.452%.

The market now predicts the Bank of England will be forced to raise the Bank Rate again when it makes its next scheduled announcement on 22 June (currently it is at 4.5%) to combat stubborn inflation.

A rise to 4.75% or even 5% is expected.

Nick Mendes, mortgage technical manager at broker John Charcol, said the swap rate changes are causing havoc for lenders, with a knock-on for borrowers: “Future inflation figures and the Bank of England’s monetary policy meeting later this month will be a telling sign of what to expect. Any initial hopes of markets settling after the initial reaction to the inflation figures last month seem to diminish as the days go by.”

Karen Noye, mortgage expert at financial advisor Quilter, said: “This fear over high inflation and rising rates has sent many banks and building societies into a bit of a frenzy. It is nothing like the market reaction we saw after the mini-budget but it is not exactly what the market needs right now considering house prices are continuing to drop.

“Borrowers looking for a new deal may need to act more quickly. Mortgage brokers often need a fair bit of information on your finances and the faster you can get this to them the quicker you can lock into a deal and ensure you don’t end up paying an even higher rate.”

Specialist lender Foundation Home Loans is launching a range of new fixed rate deals for owner-occupier and buy-to-let borrowers. It is offering a five-year fixed rate at 6.39% for owner-occupier borrowers who just fall outside mainstream credit criteria (Foundation categorises this as F1). It has a £2,995 fee. The lender is also introducing a five-year fixed rate for F1 BtL borrowers at 6.39%, also with a £2,995 fee.

Dudley building society has relaunched its fixed rate mortgage range at higher rates, after pulling out of the market last week. It is offering a two-year fixed rate at 7.04% (90% LTV) with a £499 fee.

7 June: Rate Hikes Await Those Coming To End Of Current Deal

Millions of borrowers on fixed rates could be facing ‘mortgage shock’ when they look for a new deal, and many could struggle to meet repayments, according to research by Equifax, writes Jo Thornhill.

The research credit reference agency estimates that 7.7 million of the 10.7 million mortgages currently outstanding are on fixed rates – likely paying much lower rates than the prevailing fixed rate deals on offer in today’s market.

This is because interest rates have climbed rapidly over the past 18 months as the Bank of England has attempted to bring down soaring inflation. The next Bank Rate decision is due on 22 June and pundits now believe the Bank rate will climb further, from 4.5% to 5%.

Santander has increased its fixed rate deals for product transfers. This is for existing customers looking to switch to a new deal. All fixed rates will rise by between 0.05 percentage points and 0.33 percentage points. The bank has withdrawn its 4.59% five-year fixed rate remortgage product for buy-to-let borrowers.

More than 367,000 mortgage holders will come to the end of cheap five-year fixed rate deals over the next 12 months, according to Equifax. It estimates the average borrower will now pay up to £1,400 a month on their mortgage – 40% more than a year ago.

Separately, the Office for National Statistics says 630,000 fixed rate deals of all durations will come to an end in the remainder of 2023.

Figures released today by UK Finance, represents the banking industry, reveal that both mortgage arrears and repossessions rose in the first three months of this year. Higher interest rates and skyrocketing day-to-day household costs, such as energy and food, have increased the stress on household budgets.

UK Finance’s quarterly Household Finances Review shows mortgage borrowing was significantly reduced at the start of the year, with consumer confidence rocked by rising rates and inflation.

First-time buyer numbers are also at record lows with more buyers (19% of first-timers) having to resort to extra-long mortgage loans – 35 years or more – just to afford the monthly repayments.

Paul Heywood, chief data and analytics officer at Equifax, said: “There is a risk that some consumers could become mortgage prisoners. We expect to see a gradual increase in missed payments. Diminishing affordability levels may also restrict or even stall growth in house prices, perhaps leading to a correction in the housing market. 

“The starting point for lenders and credit providers is to understand which of their customers are most likely to be impacted by rising mortgage rates, what the extent of that rise is likely to be, and the likely timing of that impact.”

Mortgage brokers agree the market has been subdued and there will be a knock-on impact for the housing market.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘It is a concern when you see first-time buyer numbers drop, as they are widely regarded as the lifeblood of the housing market and vital to its overall health. It is no real surprise, however, with wages failing to keep pace with house prices and the deposit remaining the biggest barrier to home ownership for many.

“That said, as rents continue to rise, this will likely spur buyers on to the housing ladder, with many calling upon the Bank of Mum and Dad for assistance. Softening house prices may also persuade them that now is a good time to buy if they can.”

6 June: Virgin Money Raises SVR Towards 9% Mark

Lenders are significantly increasing the cost of mortgage borrowing, as was widely expected following last month’s inflation news, to the dismay of beleaguered borrowers, writes Jo Thornhill.

The headline rate of inflation fell from 10.1% to 8.7% from April to May but core inflation, with energy and food costs stripped out, rose from 6.2% to 6.8%, disappointing many analysts. Food inflation is running at 19.1%.

Virgin Money has announced an increase to its standard variable rate (SVR), the rate borrowers default to after their fixed rate deal ends unless they switch to a new fixed or tracker deal. It will increase to 8.74% from 8.24% and is now one of the highest SVRs on the market.

The lender’s buy-to-let SVR is increased to 8.94% from 8.44%. The variable rate changes are effectively immediately for new customers and from 1 July for existing customers.

Virgin, which has consistently offered among the most competitive fixed rate deals in recent months, also recently increased fixed rates across the board. It offers a five-year fixed rate at 4.61% (for borrowers with at least 35% equity in their property), but this deal was on offer at under 4% just last month.

Last month’s higher-than-expected inflation figures point to further interest rate rises for 2023. The next Bank of England interest rate decision is on 22 June. The market believes the Bank Rate could rise from 4.5% to 4.75% or even 5%, and that this may still not be the peak for this rate cycle.

Any increase in the Bank Rate means even higher costs for around 630,000 borrowers who are expected to come off cheap fixed rate mortgage deals in the second half of this year, according to the Office for National Statistics.

Nick Mendes, mortgage technical manager at broker John Charcol, said: “Unfortunately, inflation hasn’t fallen as quickly as markets had expected, and five-year fixed rates at under 4%, that had been available up until a couple of weeks ago, have quickly disappeared.

“While some homeowners have made the decision to fix again when it comes to remortgage, others have decided to stay on a variable rate in the hope fixed rates will fall. We’re seeing two-year fixed rates becoming popular again as this option gives homeowners the best of both worlds in uncertain times – the stability and shielding from further rate rises, while allowing the opportunity to review and not be tied into a high rate for longer than necessary.”

And David Hollingworth at London and Country Mortgages, said: “It looks like it will take a little while longer for the market to settle and borrowers will be faced with deal changes at little to no notice and replacement rates likely to be higher. There are still rates available below 5% but homeowners will have to be decisive when looking at a new deal in this fast paced market.”

Halifax is relaunching its fixed rate mortgages from tomorrow (7 June). It will offer a two-year fixed rate at 5.36% (60% LTV) and a five-year rate at 4.89% (60% LTV), for example. Both deals are for home buyers and have a £999 fee. The two-year and five-year fixed rates for remortgage with a £999 fee (60% LTV) are at 5.41% and 4.97% respectively.

Accord Mortgages, the specialist lending arm of Yorkshire building society, has increased rates on product transfer deals (for existing customers looking for a new mortgage ) and on mortgages for additional borrowing and buy-to-let. The rates are effective from tomorrow (8 June). For residential product transfer deals the rates are expected to be at least 0.25 percentage points higher, while BtL rates will rise by up to 0.66 percentage points.

The Mortgage Lender is relaunching its residential and buy-to-let product ranges – rates are repriced higher. Its five-year fixed rate for residential borrowers starts from 6.19% with a £995 fee. It is offering a buy-to-let five-year fixed rate at 5.49% (two-year fixed rates start from 5.94%) – at 75% LTV.

Lendco, the specialist buy-to-let lender, has relaunched its two and five-year fixed rate deals, after withdrawing them last week. Two-year fixed rates start from 5.29%, five-year rates from 5.69%.

TSB is increasing fixed rates by up to 0.75 percentage points across its range for residential shared equity and shared ownership borrowers and its buy-to-let mortgage deals. Its fee-free shared ownership two-year fixed rate is now 6.44% (85% LTV). The five-year fix for remortgage BtL customers is 5.44% (75% LTV) with a £995 fee.

Coventry building society has come back to the market with newly-priced fixed rates across its range. It is offering a two-year fix for existing customers looking for a new mortgage deal at 4.78% (75% LTV) with a £999 fee. For new customers – remortgage and purchase – it is offering a five-year fixed rate at 4.76% (65% LTV) with a £999 fee.

The Mortgage Works, the specialist lending arm of Nationwide building society, is relaunching fixed rate deals for buy-to-let borrowers at 80% loan to value from tomorrow (7 June). The two-year fix is 5.74% and the five-year fix is 5.94%, both deals have a 2% arrangement fee and are available for purchase and remortgage. Its fixed rates for limited companies start from 6.39%, also with a 2% fee.

5 June: Longer Term Means Higher Overall Interest Cost

One in five first-time buyers – a record number – are signing-up to 35-year mortgages to make their monthly repayments affordable, according to industry data, writes Jo Thornhill.

The figures from banking industry body UK Finance show that 19% of all mortgage loans taken out by first-time buyers in March were for terms of more than 35 years. This compares to 9% in December 2021, before the Bank of England started to increase interest rates, and around 5% a decade ago in 2013.

The UK Finance statistics, which will be published as part of its wider Household Finance Review on Wednesday this week, also reveal around one third of first-time buyers (36%) are taking out mortgages for between 30 and 35 years, rather than the traditional 25 years.

The popularity of longer mortgage terms, which have lower monthly payments, has increased in recent years as property prices have risen. But with mortgage rates climbing rapidly over the past 18 months, taking out a mortgage over 35 and even 40 years has become the only way to make buying a home affordable for many buyers.

Increasing the term or length of a mortgage reduces the monthly repayment amount, but it means borrowers pay more in interest over the life of the loan.

For example, a first-time buyer taking out a £300,000 repayment mortgage over 25 years at an interest rate of 5% would pay back £226,321 in interest over the term (this is assuming the interest rate stays the same for the duration, which in reality is unlikely).

But if the same borrower took the loan over 35 years they would pay back £336,198 in interest – £100,000 more.

Most mainstream lenders will structure a mortgage over 35 or 40 years, depending on affordability and eligibility, and also the age of the borrower.

Nick Mendes, technical mortgage manager at online broker John Charcol, said: ”Since the pandemic property prices have increased beyond expectations and clients are stretching their budgets to get on the property ladder. The most common approach is by extending the loan term as this brings down the monthly repayments.

“But first-time buyers are not the only ones extending their mortgage term. We’ve seen more homeowners coming to the end of fixed-rate deals and looking to extend the loan term to make it more affordable, in light of increased mortgage rates and other general increased household costs, such as energy and food.”

UK Finance figures show that, among home movers, 8% opted for a mortgage term of more than 35 years in March 2023. This is double the number who did the same in December 2021 (4%).

Mr Mendes adds: “Extending a mortgage term will have implications for a household’s overall finances and it’s important to understand the risks. Overpaying on a mortgage, when it is possible, is one way to try to reduce the debt more quickly.”

Lenders are continuing to pull their mortgage deals from the market while others launch new products with higher rates, as uncertainty continues around what will happen to interest rates for the rest of the year.

Fleet Mortgages, the buy-to-let lender, has launched new two and five-year fixed rates for borrowers with up to 25% equity or deposit. It had withdrawn all fixed rate products at the end of last month. The new fixed rates are at least 0.2 percentage points higher.

Its two-year standard BtL fixed rate (75% LTV) is 5.69% with a 2% fee. Five-year fixed rates (65% LTV) start from 5.69%, also with a 2% fee.

Clydesdale Bank, part of Virgin Money group, is increasing the cost of its fixed rate mortgage deals by up to 0.4 percentage points for new and existing customers from tomorrow (6 June). Two and five-year fixed rates with a £999 arrangement fee (80% LTV) will start from 4.62%. The bank has also launched a broker-exclusive five-year fixed rate (80% LTV) with £500 cashback at 4.58%.

1 June: Looming Bank Rate Rise Spooks Market

Mortgage lenders continue to withdraw deals and increase rates amid inflation uncertainty, with HSBC and Clydesdale Bank now reviewing their product offerings.

The Bank of England may decide to increase its Bank Rate from 4.5% to 4.75% when it meets later this month (22 June) because inflation, particularly food inflation, remains high.

In April, according to the Office for National Statistics, the headline rate of inflation fell less than expected, from 10.1% to 8.7%.

In May, food prices were 15.4% higher than the same period last year, according to the British Retail Consortium (BRC).

Since Bank Rate has a direct impact on mortgage lenders’ costs, we’re seeing the number of available mortgage deals shrink and average loan rates increase.

For existing customers, HSBC has added up to 0.24% on its two, three, five and 10-year fixed rates (both fee-saver and standard deals), for loans with up to 90% LTV.

For example, in its remortgage range, the lender has increased its fee-saver five-year fixed rate mortgage at 60% LTV to 4.49% – up by 0.24%.

The rate increases are greater for new customers. Across its products, borrowers will pay up to 0.38% more than they had before today.

A spokesperson for HSBC said: “There are a number of factors that need to be taken into account when setting mortgage rates including swaps rates [inter-bank lending rates] and market conditions.

“While we have been able to bring down the cost of borrowing earlier this year on a number of occasions for new and existing customers, following a review, there will be rate increases from this morning of up to 0.24 per cent for existing customers and up to 0.38 per cent for new customers.”

Meanwhile, Clydesdale Bank has withdrawn select remortgage and new customer deals at up to 75% LTV.

That means the lender will no longer offer its two and five-year fixed rates with a £1,499 fee at 75% LTV for existing customers, or its residential two and five-year fixed rates between 65% and 75% LTV.

According to our mortgage partner, Better.co.uk, the average cost of a two-year fixed rate deal is 4.82%. Average costs of a three-year deal stand at 4.63%, while a typical five-year deal today is priced at 4.42%.

These costs compare to highs of more than 6.50% seen back in October 2022.

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30 May: Almost 400 Mortgage Products Pulled From Shelves

Hundreds of mortgage deals have been pulled by lenders over the past week, according to data from Moneyfacts, writes Mark Hooson.

Borrowers have fewer residential and buy-to-let mortgages to choose from since 22 May, with the number of available mortgage deals falling from 5,385 deals to 5,012.

In the residential market, Aldermore, Foundation Home Loans and Tipton & Coseley Building Society have pulled their entire fixed rate ranges. Bank of Ireland UK, Bath Building Society, Furness Building Society and more have pulled selected fixes.

In the buy-to-let sector, Aldermore, Bank of Ireland UK, CHL Mortgages, Fleet Mortgages, Foundation Home Loans and The Mortgage Lender have pulled their entire fixed-rate ranges.

Meanwhile, Precise Mortgages, Kensington, Kent Reliance, Hodge and Marsden Building Society have each withdrawn select deals.

These borrowers join the likes of Nationwide and Virgin Money who announced changes to their mortgage products last week (see story below).

While choice has shrunk, average interest rates have grown. The average rate for a two-year fixed rate residential mortgage is now 5.38%, while a five-year fix has an average rate of 5.05%.

It’s believed lenders are reassessing their product offerings in response to uncertainty over future interest rate hikes as inflation remains high.

Though the headline rate of inflation, the Consumer Price Index (CPI) fell from 10.1% to 8.7% in April, other measures of inflation are higher. Food inflation, for example, was 15.4% in May, according to the British Retail Consortium.

Such figures have led to speculation that the Bank of England may be forced to hold or further increase its main rate next month – directly affecting mortgage lenders and the rates they charge to borrowers.

The Bank rate currently stands at 4.5% and there is speculation it could rise to 4.75% when the new figure is announced on 22 June.

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25 May: Bank Of England Expected To Push Up Rates In June

Mortgage borrowers are being warned to brace for higher costs if they need to take out a loan or remortgage in the coming months as fixed rates look set to rise further, writes Jo Thornhill.

Nationwide is increasing its mortgage rates following the spike in institutional lending rates in the past two days. The building society will increase fixed rates by up to 0.45 percentage points for new borrowers, including first-time buyers, and on deals for existing customers looking to transfer.

The increases will apply to its two, three, five and 10-year fixed rates between 60% loan to value (LTV) and 95% LTV, as well as its two-year tracker products.

For first-time buyers and those looking to move home, rates will increase by between 0.05 percentage points and 0.40 percentage points on products up to 95% LTV
For those looking to remortgage, rates, will increase by between 0.05 percentage points and 0.40 percentage points on products up to 90% LTV
Switcher, Additional Borrowing and Existing Customer Moving Home rates will increase by between 0.05 percentage points and 0.45 percentage points, while Shared Equity rates will increase by up to 0.45 percentage points.

Nationwide’s five-year fixed rate deal for remortgage at 60% LTV has increased to 4.64% from 4.24%. The two-year remortgage fixed rate (also 60% LTV) is now 4.99%, up from 4.59%. Both deals have a £999 fee.

The lender has also pushed up its two-year tracker deal (60% LTV) so the starting pay rate is now 5.04%, up from 4.74% previously. There is a £999 fee.

Virgin Money is increasing its fixed rate mortgage deals by up to 0.12 percentage points. The increase affects selected residential and buy-to-let fixed deals. Product transfer mortgage deals – available to existing Virgin customers looking for a new deal, will increase by up to 0.1 percentage points.

The lender’s five-year fixed rate for new customers (65% LTV) is now 4.12% with a £995 fee. The equivalent two-year fix is 4.61%.

Aldermore is pulling all residential and buy-to-let mortgage products from the market, effective from 6pm today (26 May). It is expected it will relaunch its product range next week with higher rates.

Principality building society and two specialist lenders, Fleet Mortgages and Lendco, have also pulled their fixed rate mortgage ranges from the market. The Mortgage Lender (TML) will be withdrawing all buy-to-let fixed rate mortgage products by 5:30pm today (26 May).

Leeds building society is withdrawing selected residential fixed rates and interest-only fixed rates at 6pm today (26 May)

Bank of Ireland is withdrawing selected residential deals and all buy-to-let mortgages at 6pm today (26 May).

MPowered Mortgages is pulling all residential fixed rate products from the market at midnight on Monday 29 May. New products and rates will be launched on Tuesday 30 May

State Bank of India is withdrawing its entire buy-to-let product range as of 5pm today (26 May) while it reviews its pricing.

Bath building society is withdrawing its residential two-year fixed rate deals at 80% and 95% LTV and its rent-a-room two-year fix at 85% LTV (this is a mortgage deal that enables the borrower to let a room in their home and use the income towards their mortgage repayments).

It is expected other lenders will follow suit in pulling their deals and launching new fixed rate products with higher rates.

Swap rates – the benchmark interest rates used by banks when they lend to each other – jumped following the release of the latest consumer prices index measure of inflation on Wednesday. This is because the market had expected inflation would fall to a lower level than the 8.7% recorded.

Stubbornly high inflation means that the Bank of England is likely to push interest rates up even higher than the current level of 4.5% in an attempt to further bring down inflation. Previously many mortgage lenders had thought 4.5% would be the peak of this interest rate cycle.

But when the market expects this to happen lenders tend to push up their fixed rate mortgage deals – even before an actual interest rate decision.

A higher Bank of England Bank Rate will also mean higher variable and tracker mortgage rates. This comes after 12 successive increases to Bank Rate over the past 18 months, which have led to significantly higher mortgage repayments for borrowers.

The next rate announcement from the Bank of England is due on 22 June.

Nick Mendes, technical manager at broker John Charcol, said: “The fall in inflation was less than everyone expected and as a result the market is now factoring in a higher peak in Bank Rate. Swap rates shot up yesterday, and again this morning – and this follows several days of significant rises. Over the past month swap rates have increased by more than 0.5 percentage points.

“We are starting to see the impact of this, with lenders pulling deals from the market to reprice higher. Based on current rates I doubt there will be rates available significantly below 5%. Borrowers waiting to see what happens to mortgage rates should look to get their mortgage application underway.”

Mark Harris, chief executive of broker SPF Private Clients, feels the market reaction has been surprising, particularly given inflation has come down. He expects the volatility in swap rates will settle in the coming days: “Markets have reacted negatively on the back of expectations as to where inflation should be by now, versus the reality.

“Fixed-rate mortgage pricing had already been rising with a number of lenders repricing recently or giving a heads-up that they intend to do so. Others are likely to follow suit, with short notice.

“The markets’ assessment of where interest rates are heading has been consistently wrong over the past nine months. Swaps can be extremely volatile and this is likely to be a knee-jerk reaction before they settle down.

“My advice would be to wait a few days for the markets to settle and then hopefully we will have a better picture. We remain confident mortgage rates will peak soon and the reductions, when they arrive, will be as quick as the recent rises.”

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15 May: Additional Borrowing Available Up To £15,000

Nationwide building society is offering its existing mortgage customers interest-free loans to pay for green home improvements, writes Jo Thornhill.

The loans, which will be classed as ‘green additional borrowing’, will be available from £5,000 up to £15,000 (available up to total mortgage borrowing of 90% loan to value of the property concerned).

Any Nationwide mortgage customer can apply for the green loan, which will be available from 1 June. Around 5,000 loans will be made available.

The 0% loan can be taken over two or five years before it reverts to Nationwide’s standard variable rate (currently 7.74%). The money must be spent on non-structural green home improvements, such as:

solar panels
air source heat pumps
cavity wall insulation
window upgrades
electric car charging stations
small scale wind turbines
other eligible green investments.

While Nationwide has offered competitive rates on borrowing for green home improvements before, this is the first time it has made interest-free loans available.

The mutual says it has launched the offer to test whether lowering the cost of the loan will encourage homeowners to make their properties more energy efficient.

A recent survey by Citizens Advice found that 90% of households feel the high cost of ‘green’ home improvements is the main barrier to carrying out the work. Fewer than one in five said they were willing to borrow more on their mortgage or through an unsecured loan to do the work.

The charity has warned that homes will each need an energy-efficiency upgrade costing £15,000, on average, if the UK is to achieve net zero carbon emission status by 2050.

A number of other mortgage lenders, including Barclays, Saffron building society and Skipton building society, offer various incentives and cashback to borrowers carrying out ‘green’ home upgrades or retrofitting energy efficient measures. But no providers are yet offering 0% loans in the same way as Nationwide.

Coincidentally, Skipton building society has today (15 May) increased the cost of its fixed rates for ‘green’ additional borrowing, for example. It offers loans between £5,000 and £50,000 for existing residential mortgage customers with rates at 4.99% over two years (up from 4.90%) or 4.53% over five years (4.16%).

Nick Mendes at broker John Charcol said: “With the government net zero pledge and greater focus on lenders’ role in educating, promoting and helping customers invest in their homes to become more sustainable, this is a fantastic move by Nationwide.

“Affordability will always remain a barrier for many households, especially when you consider it can take years for the investment to pay for itself through the cost savings.”

David Hollingworth at broker London & Country said: “By cutting this rate to 0% Nationwide will grab the attention of any homeowner planning to make energy-efficiency improvements.

“We need more lenders to be making funding options available to help homeowners implement green changes, which usually require a substantial initial outlay for longer-term benefits.”

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12 May: Lenders Hold Variable Rates Despite Bank Rate Hike

HSBC, Santander and Coventry and Skipton building societies have each committed to not raising the cost of their standard variable rate (SVR) mortgages despite yesterday’s quarter percentage point increase to the Bank of England Bank Rate, which took it to 4.5%.

Lenders usually put up their SVRs in response to any Bank Rate rise. HSBC’s SVR will remain at 6.99%, Santander at 7.50%, Coventry building society at 6.99% and Skipton building society at 6%.

Skipton has previously announced that it will increase its SVR to 6.25% from 1 June in response to the increase in the Bank Rate in March to 4.25%.

The lenders concerned say their tracker mortgage rates – which are formulated to match movements in the Bank Rate – will increase as usual.

Santander’s SVR decision comes after a letter was sent this week from the Treasury Select Committee to its chief executive, Mike Regnier, questioning the fairness to customers of how interest rate changes are passed on to customers (see story).

Similar letters were sent to bosses at Nationwide, TSB and Virgin.

According to Better, the mortgage broker, the average standard variable rate is currently 7.26%.

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11 May: Clydesdale, TSB, Platform Deals Edge Upwards

Lenders are pushing up fixed mortgage rates as the market digests another increase in the Bank of England’s Bank Rate, writes Jo Thornhill.

The Bank Rate increased to 4.5% today. Some lenders acted in advance of the decision to raise the rate by a quarter percentage point from 4.25%, which was widely expected, with more likely to follow.

Clydesdale Bank Fixed rate deals for borrowers with between 10% and 35% equity or deposit are increasing by up to 0.31 percentage points, while deals for professional and newly qualified professionals are rising by up to 0.1 percentage points. Clydesdale, part of the Virgin Money group, is also increasing fixed rates on its buy-to-let mortgage range (60-75% LTV) by up to 0.20 percentage points
TSB Fixed rates are increasing by up to 0.4 percentage points across its range. Its five-year fixed rates for purchase and remortgage have been pushed up by 0.3 percentage points and start at 4.49% (80% LTV) or 4.29% (60% LTV). These deals have a £995 fee. Product transfer two- and five-year fixed rates (for existing borrowers looking for a new deal) are increased by 0.4 percentage points. The two-year rate is 4.49% and the five-year rate is now 4.24%. Both deals are at 60% LTV and have a £995 fee.
Platform The lending brand owned by Co-operative Bank has increased its fixed rate mortgages for new residential and buy-to-let customers. Three- and 10-year fixed rates for new owner-occupier deals have increased by up to 0.34 percentage points and BtL deals will rise by up to 0.33 percentage points. Help to Buy fixed rates have been increased by up to 0.35 percentage points. Product switch deals (for existing customers looking for a new deal) have been increased by up to 0.37 percentage points. At the same time Platform has launched a range of new fixed rate deals for borrowers with just a 5% deposit or equity. The two-year fixed rate at 95% LTV with a £999 fee is 5.57%

9 May: Skipton Unveils 100% No Deposit Deal For Renters

As indicated on 12 April (see dated story below), Skipton building society has launched a 100% mortgage product aimed at renters, writes Kevin Pratt.

Unlike other deals designed for this market, there will be no requirement for borrowers to provide guarantors for their repayments, such as friends or family – referred to by the lender as the ‘Bank of Mum & Dad’.

Instead, the no-deposit five-year fixed-rate loan will be available to “tenants who can evidence affordability for a mortgage and have a strong track record of rental payments.”

Borrowers must be first-time buyers aged 21 or over. The maximum term of the loan is 35 years.

Skipton says it expects high demand for the product and says it may sell out quickly.

The interest rate, at 5.49%, is higher than mainstream five-year fixed deals, reflecting the higher risk of default carried by the lender. According to our broker partner Better, the average rate for five-year fixed rates is 4.30%.

In addition to passing affordability and credit reference checks, would-be borrowers will need to show evidence of a minimum 12-month good track record rental history.

Skipton will also calculate to ensure monthly mortgage payments are not greater than the average of their last six months’ rental costs.

For example, a tenant paying an average of £800 per month over the last six months will have a maximum monthly mortgage payment of £800.

The number of privately-rented households in England has more than doubled since 2000 to stand at 4.6 million. Skipton says over 80% of tenants feel ‘trapped’ in the rental cycle, paying rents that are higher than a mortgage, which prevents them from saving a deposit to buy a property.

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5 May: Typical Purchase Price At Record Level – Rightmove

First-time buyers are paying £200 more a month on their mortgage compared to a year ago to get on the property ladder, according to property website Rightmove, writes Jo Thornhill.

The firm says rising interest rates mean borrowers with a 15% cash deposit are paying £1,056 a month on their mortgages, compared to £865 a month in May 2022.

The calculation is based on an average five-year fixed rate of 4.44% (on a 25-year repayment mortgage) for an average first-time buyer mortgage of £191,219. It assumes a purchase price of £224,963 – Rightmove’s highest recorded average asking price for first-time buyer properties.

In contrast, one year ago, average five-year fixed rates at 85% loan to value (LTV) were 2.76%.

That said, today’s five-year fixed rate mortgages have fallen from their peak in autumn 2022. The average five-year fixed rate at 85% LTV was 5.89% last October.

Platform Mortgages, part of the Co-operative Bank, is withdrawing its two- and five-year fixed rate deals for residential customers at the end of today (5 May). Brokers expect the lender will relaunch fixed rate deals with higher rates next week.

Despite the significant rise in borrowing costs for all homebuyers, interest in property remains high, according to Rightmove, with demand for a first home 11% higher than typical pre-Covid levels.

The property portal says the stabilisation of mortgage rates and a ‘frenetic’ rental market are pushing more first-time buyers to the market.

Matt Smith, Rightmove’s mortgage expert, said: “The combination of a new record price and higher mortgage rates than last year means it is a challenge for first-time buyers.

“Our data indicates that first-time buyers who are able to raise their deposit are still finding buying compelling, with the number of people looking to move in this sector currently higher than the last more normal market of 2019.

“Now that rates are settling, would-be buyers planning a move may need to assess their individual circumstances and weigh up their affordability based on current rates, with the potential cost of waiting or paying rent for longer.”

3 May: Volatility Grows As Market Prices-In Possible Rise

Skipton building society, TSB and Foundation Home Loans are among lenders tweaking the cost of their mortgage rates as volatility creeps into the markets and providers look to manage their lending commitments, writes Jo Thornhill.

The Bank of England will announce its decision on the Bank Rate, which hugely influences mortgage and other interest rates, on May 11. There had been hopes that the rate might be held at 4.25% but now expectation is growing that it will rise to 4.5%.

Skipton is updating its residential and buy-to-let mortgage ranges from Friday (5 May). Some fixed rates will be cut, but the lender is withdrawing its five-year fixed rate for buy-to-let borrowers at 70% loan to value. The mutual is offering a two-year fixed rate for residential purchase and remortgage at 4.74% and a five-year fix at 4.14%. Both deals are at 60% LTV and have a £995 completion fee
TSB is withdrawing all two-year fixed rates for residential remortgage borrowers up to 75% LTV from 4 May.
Foundation Home Loans, the specialist buy-to-let lender, is cutting mortgage rates by up to 0.7 percentage points across its owner-occupier loan range and by up to 0.35 percentage points across its BtL range. Foundation’s variable rate loans for residential borrowers now start from 5.99%. Two- and five-year fixed rates start from 6.24% with a £995 fee. Five-year fixed rates for BtL borrowers now start from 5.74% (65% LTV) with a £3,995 fee. The five-year fixed rate for houses for multiple occupancy (HMOs) start from 6.19% with a £1,995 fee.

2 May: Virgin, HSBC, NatWest Up Rates For New & Existing Borrowers

Lenders are pushing up the cost of fixed-rate mortgages as financial markets become jittery in the run-up to the Bank of England interest rate decision on 11 May, writes Jo Thornhill.

Swap rates – the rates at which the banks lend to each other – have been nudging upwards in expectation of a rise in the Bank Rate. Swaps are used by mortgage lenders to price their fixed-rate deals for borrowers.

Nick Mendes at broker John Charcol said: “The markets had already priced in an 0.25% increase to the Bank Rate for Thursday next week. But despite this there is volatility in the markets.

“Two-year swap rates are up to 4.471% – up from 4.454% late last week, although long-term swap rates have fallen slightly. The expectation of a price war among mortgage lenders appears to have faded, at least in the short term.”

Among the lenders increasing mortgage rates are:

Virgin Money is increasing its fixed-rate mortgages and buy-to-let loans for new customers by up to 0.3 percentage points and increasing product transfer deals (for existing customers looking for a new loan deal) by up to 0.38 percentage points. Virgin’s five-year fixed rate for new customers will now start at 4.09% (65% LTV) – up from 3.79%. The same deal was cut from 3.9% to 3.79% just 12 days ago. Buy-to-let fixed rates will now start from 4.52% (65% LTV) and fixed rates for product transfer will start from 3.99%
HSBC is increasing fixed rates for new residential customers and existing customers looking for new deals. Rate increases are being applied across all loan-to-value ratios and also for first-time buyers. HSBC is also cutting fixed rates for new and existing buy-to-let borrowers
NatWest is increasing the cost of two- and five-year fixed rates for new and existing customers by up to 0.21 percentage points. New rates apply for remortgage, first time buyers, shared-equity loans, purchase deals and also green mortgages for purchase and remortgage. It is offering a two-year fix for remortgage at 4.46% (60% LTV) with a £995 fee and a five-year fix at 4.05% (60% LTV) with a £1,495 fee. Switcher fixed rates deals, for existing customers looking for a new rate, are going up, but the two-year tracker deal for existing customers has been cut by 0.81 percentage points.

27 April: Lenders Fight For Spring Market Share

More lenders have nudged down the cost of their fixed rate mortgage deals to attract new business, despite experts predicting a further increase to the Bank of England Bank Rate next month, writes Jo Thornhill.

TSB is cutting its two and five-year fixed rates for residential and buy-to-let (BtL) borrowers by up to 0.25 percentage points. Deals for house purchase are being cut by up to 0.15 percentage points. The bank is offering a two-year purchase fixed rate at 4.49% with a £995 fee (85% LTV). The equivalent five-year fix is now 4.29%. Its fee-free two-year fix for remortgage customers is 4.64% (75% LTV). Among its new BtL rates is a two-year fix with a £1,995 fee at 4.59% (60% LTV). THe deal has free legals and £300 cashback
Saffron building society is relaunching its fee-free two-year fixed rates for first time buyers (at 90 and 95% LTV). The rates are 5.57% (90% LTV) and 5.87% (95% LTV). The mutual lender is also cutting its discounted variable rate mortgage for self-build borrowers. The new pay rate is 5.39% (down from 5.59%). It is a 2.6 percentage point discount off its standard variable rate of 7.99%.

The Bank Rate announcement will be on 11 May. It currently stands at 4.25%, with some commentators expecting a rise to 4.5%.

26 April: Fluctuating Wholesale Rates Influence Pricing Decisions

Nationwide building society is increasing its fixed rates across select mortgage products for new customers by up to 0.45 percentage points, writes Jo Thornhill.

The move by the mutual lender bucks the trend of recent cuts to fixed rate mortgage deals by a swathe of mainstream lenders and specialists in recent weeks.

The lender has increased rates on two, three and five-year fixed rates up to 90% LTV for new customers moving home and remortgaging, and for first time buyers.

It is offering a two-year fixed rate for home movers with a £999 fee (60% LTV) at 4.64% – up from 4.39%. The equivalent deal over three-years is now 4.44% – up from 4.29%. The five-year fixed rate with a £999 fee (60% LTV) has gone up from 3.99% to 4.19%.

It is offering fee-free options, also for home movers, at slightly higher rates. The two-year fee-free fixed rate is now 5.24% (up to 90% LTV). The two-year fee-free fix at 95% LTV is unchanged at 5.64%.

Nationwide has also increased its two-year tracker mortgage deal by 0.1 percentage point (up to 75% LTV) to 4.59%.

A Nationwide spokesperson said: “We have made a number of rate reductions since the start of this year. However, the current financial market environment continues to see swap rates fluctuate and, more recently, increase.

“As a member-owned organisation we are not immune to this, and we need to ensure our new business mortgage rates are sustainable, which is why we are increasing rates on selected products. However, even with these changes Nationwide remains well-positioned in the market to support borrowers of all types.”

Swap rates are the interest rates charged by banks and financial institutions when they lend to each other, and their level determines the rates charged to mortgage borrowers.

25 April: NatWest, Clydesdale, YBS Join Rate-Cutting Trend

Lenders from across the market continue to chip away at their fixed rate mortgage deals in an attempt to entice new business and grab market share, writes Jo Thornhill.

The best five-year fixed rate deals remain below 3.9% in welcome news for borrowers. The Bank of England Bank Rate is 4.25% although experts predict it could rise to 4.5% when the next adjustment is made on 11 May.

Among lenders lowering their rates are:

Yorkshire building society is cutting the cost of fixed rate mortgages for some high loan to value (LTV) deals by 0.05 percentage points. It is offering a five-year fix for first-time buyers (FTB) with a 10% deposit (90% LTV) at 4.87%. The deal has no fee and pays £1,000 cashback on completion. There is a two-year fixed rate, also for FTB, at 5.02%, but there is a £1,495 fee. The same two-year fixed rate deal is available for remortgage customers – also at 90% LTV
NatWest is cutting rates for new and existing residential and buy-to-let (BtL) customers by up 0.21 percentage points. Among deals for new customers it is offering a two-year fixed rate at 4.81% (90% LTV) with a £995 fee and a five-year fix at 4.88% (75% LTV) with no fee. Its BtL two-year fix for new borrowers is 5.22% (75% LTV) with no fee. For existing customers the lender has a two-year fix at 4.82% (60% LTV) and a five-year fix at 4.49% (60% LTV) – both deals have a £995 fee
Clydesdale Bank, part of Virgin Money group, is cutting fixed rates by up to 0.13 percentage points for new and existing borrowers. It is offering a five-year fixed rate (75% LTV) at 3.91% with a £1,499 fee and a two-year at 4.26% (75% LTV), also with a £1,499 fee
YBS Commercial Mortgages, part of Yorkshire building society, is cutting the cost of fixed rates for landlords with semi-commercial properties – those that are part-commercial, part-residential. It has cut its five-year fixed rate from 6.55% to 6.45% (70% LTV) for properties up to £20 million. However, smaller loans for commercial buy-to-let borrowers (£1 million or less) will increase in cost. The lender has upped five-year fixed rates by 0.2 percentage points to 5.5% (at 65% LTV) and to 5.7% (at 75% LTV).

See stories below for other recent rate changes.

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20 April: Attractive Rates Aim To Keep Market Moving

Family building society is cutting fixed mortgage rates by up to 0.3 percentage points across owner-occupier, interest-only, buy-to-let and expat deals, writes Jo Thornhill.

The mutual is offering a five-year fixed rate for residential customers at 4.99% (60% LTV) with a £999 fee but it has withdrawn all two-year fixes. The five-year fix for buy-to-let landlords starts from 5.84% (60% LTV) with a £999 fee.

Zephyr Home Loans, the specialist buy-to-let provider, is cutting its tracker product rates by up to 0.4 percentage points. It is offering a lifetime tracker deal at Bank of England Bank Rate plus 1.69%, giving a starting pay rate of 5.94% (65% LTV). The same deal for landlords of houses of multiple occupancy (HMO) is now at Bank Rate plus 1.89%, giving a starting pay rate of 6.14%. Both tracker deals have a 3% fee and a £200 application fee.

Specialist lender LendInvest is cutting residential mortgage rates across its range for the self-employed and those with non-standard income and credit histories. Five-year fixed rates for purchase and remortgage, available through brokers, start at 5.29% with a £1,195 fee (65% LTV).

A two-year fix at 90% LTV, also for purchase or remortgage with LendInvest, is now 6.89% with a £995 fee. This rate is for properties with an energy performance certificate rating of A to C.

Santander is cutting fixed rates for residential remortgage borrowers by up to 0.17 percentage points. Its fee-free five-year fixed rate is now 4.03%. Fee-free two-year fixed rates start from 4.49% (both deals are at 60% LTV). Residential lifetime tracker rate deals are being reduced by up to 0.3 percentage points.

Buy-to-let fixed rates are also being cut by up to 0.2 percentage points. There is a five-year fix for purchase and remortgage at 4.37% (60% LTV) with a £1,479 fee.

TSB is cutting rates across its product transfer and additional borrowing mortgages by as much as 0.65 percentage points. It is offering a five-year fix for product transfer (for existing customers looking for a new deal) at 3.89% (60% LTV) with a £995 fee.

It also has a 10-year fix at 3.99% (60% LTV) with no fee. Two-year fixed rates start from 4.09% (60% LVT) with a £995 fee, or fee-free the rate would be 4.49%.

Platform, part of the Co-operative Bank, is cutting fixed rates by up to 0.55 percentage points. It has a two-year fixed rate at 4.2% (60% LTV), three-year rates from 4.27%, five-year rates from 3.9% and 10-year rates start at 4.05%.

West One, the specialist lender, is launching a range of residential mortgage deals with rates as much as 0.94 percentage points lower than its existing deals.

Its Platinum range has a two-year fix at 5.59% and a five-year fix at 5.45%. Deals are available to first time buyers, home movers and remortgage customers, including those with lower credit scores. Maximum loan to value is 70% and arrangement fees range from £995 to £2,995, depending on the size of the loan.

HSBC is cutting its two, three and five-year mortgage fixed rates by up to 0.25 percentage points. It has also introduced a £300 cashback incentive to new customers who remortgage to a fixed rate with the bank.

Among its new rates HSBC is offering a five-year fix for remortgage customers at 3.84% (60% LTV) with a £999 fee, a three-year fix (80% LTV) at 4.19% with a £999 fee and a three-year fix for home movers at 4.19% (60% LTV), also with a £999 fee.

Nationwide building society is cutting its fixed mortgage rates by up to 0.3 percentage points for new and existing borrowers with low amounts of equity or a small deposit.

Included among the reductions from Nationwide are a five-year, fixed-rate mortgage at 4.44% (90% LTV) and a two-year fix at 5.29% (95% LTV) that both incur a £999 fee. Each deal is aimed at new customers.

First-time buyer deals, meanwhile, have been cut by up to 0.2 percentage points. There is a two-year fix at 4.89% (90% LTV) or a three-year fix at 5.24% (95% LTV). Again, a fee of £999 applies to both. First-time buyer deals come with £500 cashback on completion.

Switcher deals, aimed at existing Nationwide customers looking for a new mortgage rate, are being cut by up to 0.3 percentage points. These include a five-year fixed rate at 3.89% (60% LTV) with a £999 fee and a 10-year fix at 4.29% (60% LTV) with no fee.

The Mortgage Works (TMW), Nationwide’s specialist lending arm, is cutting rates across its range by up to 0.5 percentage points. Its five-year buy-to-let fix is now 3.99% with a 3% fee (65% LTV). The five-year fixed rate for limited company landlord deals is 4.94% with a 3% fee (75% LTV) and the five-year fix for mortgages on houses of multiple occupancy (HMO) is 4.84%, also with a 3% fee (75% LTV).

TMW’s let-to-buy mortgages, where a borrower rents out their first home, remortgaging to fund the purchase of a second property, are also cut. The five-year fixed rate let-to-buy deal is now at 4.59% (75% LTV) with a 3% fee.

Virgin Money is cutting its broker-only fixed mortgage rates and offering a five-year fix at 3.79% (65% LTV) – down from 3.9%.

This is the lowest rate five-year fix on the market, although it charges a £1,495 fee.

Other fixed rates have been cut by up to 0.23 percentage points. The lender’s five-year fix with a lower £995 fee is now at 3.82% (65% LTV) and the same deal at 75% LTV is now 3.99%.

Buy to let rates have also been cut, as well as fixed rates at higher LTVs for residential borrowers. The fee-free five-year fix (95% LTV) is now 4.97%.

Coventry building society is cutting rates on selected residential and buy-to-let mortgages available through brokers.

Its first-time buyer deals at 90% and 95% loan to value (LTV) have been trimmed down and it is offering a five-year fixed rate at 4.71% (90% LTV) with no fee and a two-year fix at 5.61% (95% LTV), with no fee and £500 cashback on completion.

The lender has cut some rates on product transfer deals for existing customers. It is offering a five-year fix at 4.22% (85% LTV) with a £999 fee.

Buy-to-let deals have also been cut. There is a five-year fixed rate for purchase and remortgage at 4.4% (65% LTV) with a £1,999 fee.

Aldermore, the broker-only lender, is cutting rates for residential and buy-to-let (BtL) borrowers by up to 0.35 percentage points and 0.1 percentage points respectively.

For residential customers the lender is offering a two-year fix at 6.39% (90% LTV) with a £999 fee. The fee-free two-year deal (also 90% LTV) is at 6.64%. The fee-free five-year fix at 90% LTV is now 6.49%.

In its BtL range, it is offering a five-year fixed rate (75% LTV) for landlords with single residential investment properties at 5.44%. For properties with an EPC (energy performance certificate) rating of A to C, the same deal is 5.34%

Keystone Property Finance is cutting rates on its five-year fixes in its classic range by up to 0.3 percentage points. Among the deals is a five-year fix at 4.94% (75% LTV) with a 4.5% arrangement fee.

Foundation Home Loans, the specialist broker-only lender, is cutting fixed rates on buy-to-let loans by up to 0.75 percentage points. It is offering a five-year fix at 5.39% (75% LTV) with a £4,995 fee.

Foundation is also cutting owner-occupier deals by up to 0.6 percentage points. Its deals, which aim to help those with less than perfect credit scores, start at 5.89% for a two-year fix at 65% LTV with a £995 fee.

12 April: Building Society To Ease Plight Of ‘Generation Rent’

Skipton building society is working on a mortgage product aimed at helping long-term renters onto the property ladder, writes Jo Thornhill.

The mortgage will help tenants currently stuck in a negative cycle of being unable to save up a deposit to buy a first home due to high – and rising – rental costs.

Rental costs increased by 4.8% in the year to February 2023 in the UK (excluding London), according to the Office for National Statistics. Private rental prices in London increased by 4.6% in the same period – this is the strongest annual percentage change in the capital since 2013.

Full details of the Skipton mortgage for renters — and the launch date – have yet to be released, but it is expected the product will take into account long-term rental payments as part of the overall mortgage affordability assessment.

The deal is also likely to require a lower level of cash deposit.

Stuart Haire, chief executive of Skipton Group said: “There are too many people who are trapped in rental cycles.

“These include people who have a decent history of making rental payments over a period of time and can evidence affordability of a mortgage, yet their only barrier to becoming a homeowner is not being able to save enough for a deposit and through lack of access to the bank of Mum and Dad.

“We know there isn’t one quick solution to addressing this huge societal challenge of tenants being trapped in renting cycles, with rents escalating faster than mortgage payments and the increasing costs of living, but doing nothing isn’t going to solve this issue. So we’re ensuring all these considerations and more are going into the development of our new product.

“We’re carefully looking at how we can best tackle the challenges that ‘generation rent’ is facing, together with managing the potential risks and challenges they may face in the future too.

“We know this product will not be able to help everyone and is only part of the solution for this group of people, but as a lender, we’re taking a stand to offer innovation in this space to help more people become first time buyers.”

At the same time Skipton has increased fixed mortgage rates across its residential and buy-to-let ranges. It is offering a two-year fixed rate for purchase and remortgage at 4.81% (60% LTV) with a £995 fee. The equivalent five-year fix is at 4.14%. The five-year BtL fixed rate (60% LTV) is at 4.72% with a £1,995 fee.

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5 April: Borrowers Urged To Plan Ahead As Deals Near End

The average standard variable rate (SVR) of mortgage interest has passed the 7% mark for the first time in 15 years, piling on the pain for beleaguered borrowers with variable rate deals, writes Jo Thornhill.

At the same time, lenders are cutting their fixed rates of interest, with HSBC group the latest to announce a reduction (see below).

SVR mortgage rates fluctuate according to movements in the prevailing rate of interest, with recent increases attributed to the rise in the Bank Rate (from 4% to 4.25%) last month. However, because lenders can set their SVR at their preferred level, changes are not always exactly in line with changes to Bank Rate.

The average SVR was recorded at 7.15% at the end of March, according to data from online broker Better. The last time SVRs were this high was in 2008.

Mortgage borrowers automatically move onto their lender’s SVR when they come to the end of a fixed rate, tracker or discounted rate deal, unless they remortgage to a new deal.

The current average SVR of 7.15% compares to an average of 3.88% in December 2021, before the Bank of England Bank Rate started to climb. There have been 11 consecutive rate rises since then.

A borrower with a £150,000 repayment mortgage over 25 years would pay £1,075 a month on an SVR of 7.15%. This compares to £711 for the same borrower on a fixed rate of 3%.

Sam Amidi, head of mortgages at Better, said: “With many customers trying to work out whether to commit to a deal or see what happens to the market, we are seeing more customers moving onto their lender’s SVR. Customers should speak to an adviser to establish what their plans are and if there are cheaper options than going onto an SVR.”

Mr Amidi suggests a tracker deal with no early repayment charges could be a good option as it provides flexibility. With a penalty-free tracker borrowers can benefit if interest rates fall but if rates stay high or rise they are free to switch to a different deal at any time.

Nick Mendes at broker John Charcol said: “The unpredictability of interest rate movements makes it hard for borrowers to plan their finances. But mortgage costs will jump significantly if you don’t switch to a new deal, even if you’re only on SVR for a month or two, because SVR rates themselves tend to be significantly higher than the best fixed rate deals.

“Now more than ever borrowers should invest the time in finding a new deal ahead of their old rate coming to an end, and avoid SVR.”

Homeowners keen to avoid paying SVR and pay less for their mortgage can look for a new home loan deal well in advance of their existing fixed or tracker deal coming to an end. Deals can be reserved up to six months in advance.

Lenders continue to chip away at their fixed rates in an attempt to entice new business. Among the latest changes are:

Santander is cutting fixed mortgage rates for new and existing customers by up to 0.2 percentage points from tomorrow (6 April). It is offering a five-year fixed rate for house purchase at 3.94% (60% LTV) with a £999 fee
Coventry building society is cutting selected two-year and three-year fixed rate residential mortgage deals, available through brokers, by up to 0.3 percentage points. It is offering a two-year fix (65% LTV) at 4.21% with a £999 fee, available for residential purchases and remortgage or a three-year fix at 4.18% (75% LTV) also with a £999 fee
TSB is cutting rates by up to 0.1 percentage points across its two-year and five-year fixed residential mortgages. Its two-year fix for remortgage and product transfers (60% LTV) is now at 4.29% and the five-year fix (60% LTV) is 3.99%. The same deals at 75% LTV are at 4.34% and 4.09% respectively. These deals all have a £995 fee
Natwest is cutting fixed rates by up to 0.29 percentage points for residential and buy-to-let (BtL) borrowers. It has a two-year fix for remortgage at 4.59% (80% LTV) with a £995 fee, or a fee-free option at 4.89%. The five-year fix for home purchase is at 3.94% (60% LTV) with a £1,495 fee. The five-year fix for remortgage (also 60% LTV) is now 3.94% with a £995 fee
HSBC has cut fixed rates by up to 0.21 percentage points across its range. It has a five-year fix for remortgage customers at 3.93% (60% LTV) with a £999 fee. It has a five-year fix home mover deal at 4.44% (90% LTV) with a £999 fee. However, the bank has increased the SVR on its buy-to-let mortgages by 0.25 percentage points to 7.1% (its residential SVR is unchanged).
First Direct, part of the HSBC banking group, has also cut fixed rates by up to 0.25 percentage points. Its five-year fix (60% LTV) is 3.99% with no fee – this rate is market leading for fee-free five-year fixed rates. The five-year fix (60% LTV) with a £490 fee is at 3.89%. The two-year fix (60% LTV) is at 4.29%, also with a £490 fee. The same deal at 90% LTV is 4.84%.

31 March: YBS Powers In With Sub-4% Five-Year Deals

Yorkshire building society has unveiled a market-leading five-year fixed-rate mortgage at just 3.83% and slashed rates by up to 0.5 percentage points across its range of loans, writes Jo Thornhill.

David Hollingworth at broker London & Country Mortgages says Yorkshire is making a bold statement with its sub-4% deal and is pushing for a bigger slice of a contracting mortgage market: “It is positive news for borrowers with rates sharpening again after their recent bounce upwards.”

Yorkshire’s five-year fix at 3.83% is for remortgage borrowers with at least 25% equity in their home (75% loan to value ratio). The new rate is down from its previous 4.25%.

The deal carries a relatively steep £1,495 fee, but the rate undercuts the five-year fix at 3.91% launched by Virgin Money yesterday (30 March).

Yorkshire is also offering a five-year fix at 3.92% for home purchase customers (also at 75% LTV and with a £1,495 fee), and a fee-free two-year fix (85% LTV) at 5.12%, down from 5.62%.

Mr Hollingworth added: “This looks to be the level where fixed rates are settling now, although we may see more tweaks. There’s clearly hot competition in the market between lenders, which is helping to maintain and improve the rates on offer.”

Specialist lender Keystone Property Finance has cut its two-year fixed rate buy-to-let (BtL) mortgages by up to 0.4 percentage points. It is offering a two-year fix for standard BtL properties at 4.29%, and the rate for multiple occupation properties and multi-unit blocks is 4.44%. Both deals have a 4.5% fee.

See the latest information on house prices from Nationwide building society.

30 March: Virgin Moves To Offer Market-Leading 5-year Fix

Lenders are continuing to chip away at their fixed rate mortgage deals as competition for new business remains fierce, writes Jo Thornhill.

Virgin Money has cut fixed rates by up to 0.33 percentage points across a range of its residential and buy-to-let (BtL) deals available through brokers. The rates are effective from tomorrow (31 March). Its five-year fix for remortgage customers at 65% LTV is cut by 0.21 percentage points to 3.91%. There is a £995 fee. It’s five-year fixed rate BtL deal (at 50% LTV) is at 4.1% with a £3,995 fee
Accord, part of Yorkshire Building Society, has cut rates by up to 0.64 percentage points across its high loan to value (LTV) deals, aimed at first-time buyers. It is offering a five-year fixed rate at 95% LTV at 5.06% with no fee and £250 cashback. This product is available for borrowers using the deposit unlock scheme – a private scheme run by house builders that enables buyers to get on the property ladder with a 5% cash deposit. Accord is also offering a fee-free two-year fixed rate for remortgage at 5.61% at 90% LTV with £500 cashback. The same deal for home purchase is 5.04% with a £995 fee and £500 cashback. At the same time selected fixed rates at 60% and 75% LTV have also been cut by up to 0.48 percentage points.

Gemma Hyland, Accord mortgage product manager, said: “Due to changes in market conditions driving falling swap rates, we’re reacting quickly and taking the opportunity to review our product range, to offer brokers and their clients better value.”

27 March: HSBC Extends Rate Cuts Across Customer Base

Lenders are continuing to trim mortgage rates, despite last week’s increase to the Bank of England Bank Rate last Thursday, 23 March, writes Jo Thornhill.

Here are the latest lenders to cut rates:

HSBC has cut its fixed rates for residential borrowers by up to 0.2 percentage points and for buy-to-let customers by up to 0.3 percentage points. It follows a rate cut for high loan to value (LTV) customers at the end of last week. The rate reductions will benefit existing borrowers, first-time buyers and movers, remortgage customers and existing and new buy-to-let customers as well as international residential customers. The lender is offering a fee-free five-year fix at 4.39% (85% LTV) and a five-year fix at 3.89% (60% LTV) with a £999 fee. Both deals are switcher deals for existing customers. The five-year fix for new customers looking to remortgage is 4.14% (60% LTV) with no fee
Specialist buy-to-let lender Landbay has cut its two-year fixed rate range by up to 0.14 percentage points. The two-year deal for small houses in multiple occupation and multi-unit freehold blocks is now at 4.75% (up to 75% LTV) with a 3% fee. The rate is at 5.25% with a 2% fee. Rates on two-year fixes for first-time landlords and trading companies are cut by 0.1 percentage points with a rate of 4.69% with a 3% fee (75% LTV) or at 5.19% with a 2% fee.

Despite the Bank Rate rise the market has reacted positively and swap rates – the wholesale rates at which banks lend to each other and on which fixed mortgage rates are based – have dropped to their lowest since February.

Nick Mendes at broker John Charcol said this is evidence the market expects rates to fall in the medium to long term: “Lenders had priced in this latest rate rise so there won’t be many changes to fixed rate products for now.

“With lower lending volumes expected, and swaps at healthy levels we could see lenders competing for business with lower rates, which is positive news for homeowners.”

24 March: Surprise Inflation Rise Influences Bank Of England

Lenders are continuing to push down their fixed rates as competition for new business remains fierce, writes Jo Thornhill.

A broad range of lenders have reduced rates across their home loan ranges. This is despite the Bank of England raising the Bank Rate from 4% to 4.25% this week.

Clydesdale Bank, part of Virgin Money, has cut fixed rates on a range of its mortgage deals by up to 0.6 percentage points and launched products for borrowers with a small deposit. It is offering a two-year fixed rate for remortgage customers at 4.74% (80% LTV) with a £1,499 fee, although there is a £1,000 cashback and free valuation. The two-year fixed rate deal for new customers is at 4.79% (90% LTV) with no fee, or 4.74% at 80% LTV with a £1,499 fee but borrowers get £1000 cashback on completion. The lender’s professional and newly-qualified professional two-year fixed deals (at 85% and 95% LTV) start from 4.39%
Nationwide building society has cut rates across its fixed and tracker mortgage range by up to 0.45 percentage points. The reductions are effective from tomorrow (24 March) across remortgage, home mover and first-time buyer deals. It is offering a five-year fix at 3.94% (60% LTV) with a £999 fee, or at 3.99% (75% LTV) with the same fee. The two-year fee-free fixed rate is at 4.49% (60% LTV). The three-year fixed-rate first-time buyer deal is 4.89% (90% LTV) with a £999 fee
NatWest has reduced its buy-to-let (BtL) fixed rates by up to 0.27 percentage points, while nudging up some higher LTV residential fixed rate deals. For BtL it has a five-year fix (75% LTV) at 4.62% with a £995 fee. Its BtL green mortgage five-year fix is now at 4.51% (65% LTV), also with a £995 fee. For residential fixed rates the two-year fix at 90% LTV is increased by 0.06 percentage points to 4.99% while the five-year fix has risen 0.05 percentage points to 4.58%. Both deals have a £995 fee
HSBC has cut fixed rates at high loan to value (LTV) ratios across its range for new and existing customers, including first-time buyer deals. But selected fixed rate deals at 75% LTV or lower have been increased. Its two-year fix for new residential mortgage customers at 80% LTV has fallen and is now 4.59%, the three-year fix is 4.54% and the five-year fix is 4.24%, also at 80% LTV
Coventry building society has cut its buy-to-let (BtL) fixed rates by up to 1 percentage point and residential rates by up to 0.2 percentage points. It is offering a fee-free two-year fix (80% LTV) for purchase and remortgage at 4.63% and a five-year fixed rate at 4.6% (65% LTV) with a £1,999 fee for BtL or residential remortgage customers
Accord Mortgages, the broker-only lender owned by Yorkshire building society, has cut fixed rates on its buy-to-let (BtL) mortgages by up to 0.29 percentage points, effective tomorrow (23 March). It has a five-year fix at 75% LTV at 5.01% for remortgage customers. It will also offer a five-year fix at 5.31% for remortgage and purchase, also at 75% LTV. It has a £1,995 fee, but this deal has no early repayment penalties. The five-year fix at 60% LTV is 4.6% with a £1,995 fee. The fee-free two-year fixed rate at 60% LTV is 5.61%.
Pepper Money, which specialises in borrowers with lower credit scores, has cut rates across its two- and five-year fixed-rate residential range by up to 0.9 percentage points. It is offering a five-year fixed rate for new customers at 85% LTV at 8.25% and a two-year rate at 80% LTV at 8%
Fleet Mortgages has cut fixed rates across its buy-to-let mortgage range by up to 0.2 percentage points. Deals are available for standard BtL, limited company borrowers and for houses of multiple occupancy (HMO). It is offering a two-year fix at 5.49% at 75% LTV and a five-year fix at 5.19% at 75% LTV. Both loans are for standard BtL and limited companies and they have a 2% fee
Gen H has cut fixed rates across all products at 80% LTV by up to 0.15 percentage points. It is offering first-time buyer deals at 4.64% (two-year fix) and 4.45% (five-year fix), both with a £999 fee.

Steve Cox, chief commercial officer at Fleet Mortgages, said: “Due to a combination of factors including a softening of swap rates and further movement within the sector, we’ve been able to reduce our fixed-rate pricing across the board by 0.2 percentage points.

“The Budget last week, and in particular the Office for Budget Responsibility’s inflation and interest rate forecasts, appear to have added a further layer of calm to market sentiment, with the belief that rates will now peak at a lower level than previously feared. It means we’ve been able to review our pricing and cut it accordingly.”

21 March: Lenders Sense Bank Rate Hold On Thursday

First Direct is cutting its fixed rate mortgages by up to 0.3 percentage points, following a rush of lenders who have trimmed their fixed rates down in recent days (see stories below), writes Jo Thornhill.

Many lenders are now pricing in a Bank rate ‘hold’ at 4% by the Bank of England when it announces its latest interest rate decision on Thursday (23 March).

The majority of First Direct’s rate cuts are for high loan to value (LTV) deals, helping borrowers with a smaller cash deposit or less equity in their property. All First Direct mortgages are either fee-free or come with a maximum fee of £490.

The bank is offering:

five-year fix at 4.99% with no fee, available up to 95% LTV
five-year fix at 4.64% with no fee, available up to 90% LTV
five-year fix at 4.49% with a £490 fee, available up to 90% LTV
two-year fix at 4.94% with a £490 fee, available up to 90% LTV.

Carl Watchorn, head of mortgages at First Direct, said: “We have reduced the rate of borrowing across some of our higher loan-to-value products, which is great news for first-time buyers who might be looking to buy a property with a smaller deposit.

“We understand the challenges faced by first-time buyers and we want to support people who are looking to take their first steps onto the housing ladder. We offer a range of products that provide added flexibility through features such as a 40-year term and unlimited overpayments.”

20 March: Halifax Dips Under 4% For 75% LTV Borrowers

Halifax, the biggest UK mortgage lender, has cut rates across its two, three and five-year fixed deals for remortgages by up to 0.39 percentage points, while MPowered mortgages, Skipton building society, Santander and Virgin Money have also cut rates.

The moves come ahead of the Bank of England Bank rate announcement on Thursday this week. There is growing speculation that the Bank might hold the rate at 4%, which would reduce the likelihood of recent mortgage rate falls being reversed.

Halifax is now offering a five-year fixed rate at under 4% at 75% loan to value (LTV). This is where the borrower has equity worth up to 25% of their property’s value. Until recently sub-4% deals have only been available to those with at least 60% LTV (40% equity). This reduced five-year deal is at 3.99% and has a £999 fee. At 60% LTV the same five-year fixed rate is now 3.94%. The lender has also cut rates on fee-free remortgage fixed rates. At 60% LTV its two-year fix is cut by the full 0.39 percentage points to 4.97%. The same deal at 75% has also been cut 0.39 percentage points to 5.02%. At 90% LTV the two-year fee-free deal has been reduced by 0.34 percentage points to 5.52%. The five-year fee-free fixed rate at 60% LTV has fallen by 0.24 percentage points to 4.29%. At 80% LTV the same deal has been cut by 0.25 percentage points to 4.71%
Mpowered Mortgages has cut two-year fixed remortgage deals. The fee-free deal is at 5.04% (85% LTV) and the two-year fix at the same LTV is at 4.94% with a £999 fee or 4.84% with a £1,999 fee. At the same time the lender has boosted its cashback offer on five-year fixed rates from £500 to £1,000 for remortgage customers. Purchase customers get £500 cashback on five-year fixes
Skipton building society has cut the rate on its five-year fix buy-to-let mortgage, while removing from the market its 75% and 80% LTV deals for existing residential mortgage customers. These changes are effective from tomorrow (21 March).
Santander has cut fixed rates for new and existing customers by up to 0.28 percentage points, effective tomorrow (21 March) for deals available through brokers. It is offering a five-year fixed rate for purchase at 3.99% (60% LTV) with a £999 fee. At 75% LTV the five-year fix is 4.15% with no fee. There is a two-year tracker deal at 6.15% (95% LTV) with no fee, for existing customers moving home. This has been cut by 0.34 percentage points. The lender has also cut rates for mortgages for new build homes by up to 0.26 percentage points. The two-and-a-half year fix for new build property is 4.89% (85% LTV) with no fee
Virgin Money is cutting fixed rates for residential and buy-to-let (BtL) customers. The changes will be effective from tomorrow (21 March). But selected fixed rates at 85% LTV will increase by 0.05 percentage points. Product transfer fixed rates – deals available for existing customers looking to switch – have been cut by up to 0.41 percentage points. Residential deals for purchase and remortgage for new customers are cut by up to 0.10 percentage points and BtL fixed rates are cut by up to 0.15 percentage points. The two-year fix for BtL borrowers at 60% LTV is 4.82% with a £995 fee. The same deal over five-years is 4.6%.

16 March: Brokers Say Free Childcare Will Boost Affordability

Mortgage brokers have welcomed the government’s extended free childcare scheme claiming it will boost affordability for thousands of families and help many get a foothold on the property ladder. However, they say it’s unfortunate that the changes won’t begin to take effect for at least a year.

The policy, announced by Chancellor Jeremy Hunt in his Budget speech yesterday, will see an extension to the 30-hours-a-week free childcare scheme currently on offer to working families with three and four year-olds.

Under the scheme’s expansion, the 30-hours’ free childcare will be made available to eligible families with children aged nine months and over.

Childcare costs, which can run into thousands of pounds a year, have a significant impact on mortgage affordability. Mark Harris at mortgage broker SPF Private Clients said mortgage applicants with children often find they can borrow less than they envisaged once these costs have been factored into lenders’ affordability calculations.

A full time nursery place costs an average of £264 a week (£322 a week in London), according to a Family and Childcare Trust survey – and that is the cost for just one child.

David Hollingworth at mortgage broker London & Country said: “One of the biggest outgoings for borrowers is childcare. So the extension of free childcare will provide welcome relief for parents.

“That relief could be underlined when it comes to applying for a mortgage as any reduction in a big outgoing will help improve the range of mortgage options. The easier it is to meet lender criteria the easier it will be to shop around, which will help borrowers get the best overall value.”

However, the implementation of the new policy will not begin until April 2024 – and won’t apply to all under 5s until September 2025.

Mr Harris added: “As with any policy implementation it will take a while to come into force so parents should not expect any immediate relief or improvements to their borrowing potential.”

Elsewhere, mortgage lenders have continued to adjust rates in the wake of yesterday’s Budget.

Newcastle building society will increase its standard variable rate from 4.19% to 5.19% from 1 April. The mutual lender says the increase “reflects a change in market conditions and lending costs”. The increase will apply to residential, self-build and buy-to-let borrowers on SVR or on variable rate deals linked to the SVR

HSBC has cut its fixed rate buy-to-let (BtL) and international BtL mortgages by up to 0.3 percentage points. It is offering a BtL five-year fix at 4.64% (75% LTV) with a £1,999 fee. The same deal has a rate of 4.54% at 60% LTV. Two-year fixed rate BtL deals start from 4.69% (60% LTV) and 4.84% at 75% LTV – both with a £1,999 fee.

14 March: Bank Of England May Hold Key Rate At 4% Next Week

The collapse of Silicon Valley Bank last week could bring welcome relief for UK mortgage borrowers.

There was a surprise run on SVB last week as its account holders were spooked by reports the bank was sitting on huge losses on its government bond-holdings.

In addition to triggering a sell-off of banking stocks in world markets, SVB’s failure led to speculation that central banks, including the Bank of England and the US Federal Reserve, might slow down or even stop increasing interest rates.

Prior to the troubles at SVB, markets were pricing in a 0.25 percentage point increase to the Bank of England Bank Rate next week from its current level of 4%. But that sentiment has now shifted.

This is good news for borrowers on variable and tracker mortgage rates who were bracing for higher monthly repayments.

It could also spell better news for borrowers looking to remortgage to a new fixed-rate deal.

Swap rates – the wholesale interest rates at which the banks lend to each other – have fallen sharply following the news from the US. As fixed mortgage rates are largely determined by swap rates, this means fixed mortgage rates are less likely to rise in the short term.

Nick Mendes, mortgage technical manager at broker John Charcol, said: “Two year swaps on 10 March were priced at 4.28% and five-year swaps were at 3.87%. Currently they’ve fallen to 4.14% (two-year) and 3.70% (five-year).

“With rates in a state of flux we’re likely to see mortgage rates fluctuating. No one can accurately predict where rates will be in the future and there are still many factors that can change in a short period of time.

“But for those coming into their last six months of a fixed rate mortgage deal expiring, locking in a competitive rate deal now will mean you can hedge your bets. If rates increase you’ve tied into a lower rate deal and if rates fall between now and when your current deal expires you still have the option to move to a new rate at that point.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The market senses that some of the heat has come out of potential interest rate rises. The fall in swap rates in the past two days could start to filter through to fixed-rate mortgage pricing.

“We were expecting two more base rate rises but that now looks like one. This will be welcome news for borrowers, particularly those requiring high loan-to-value mortgages who pay comparatively higher rates.”

10 March: Regulator Tells Lenders To Boost Support

Lenders continue to tinker with rates as the market looks ahead to the next Bank of England interest rate decision on 23 March, writes Jo Thornhill.

There are expectations that the Bank rate, currently at 4%, will climb further and could reach 4.5% in 2023 before falling back again.

The market regulator, the Financial Conduct Authority, has told lenders to offer more support to hard-pressed borrowers facing an increase in their repayments (see story below).

Halifax has cut selected fixed rates for home buyers by up to 0.25 percentage points and reduced the rate on its remortgage tracker product, effective from Monday (13 March). The lender’s five-year fixed rates at 90% and 95% LTV have also been lowered. Its two-year fix at 90% LTV, with a £999 fee, is cut by 0.05 percentage points to 4.98%. The two-year tracker deal for remortgage customers (60% LTV) is cut by 0.13 percentage points to 4.23% with a £999 fee
Virgin Money has cut buy-to-let mortgage rates and rates on some residential deals by up to 0.45 percentage points. Its BtL two-year fix (50% LTV) is now at 4.18%, although there is a high £3,995 fee. The same deal at 60% LTV is 4.28%. The five-year BtL fixed rate is at 4.2% (50% LTV) or 4.25% (60% LTV) with the same fee. Residential purchase deals, two and five-year fixes, have been reduced by 0.1 percentage points, while some remortgage deals, also two and five-year fixes, have been increased by up to 0.15 percentage points. A fee-free seven-year fixed rate for residential borrowers has been launched at 4.34% (75% LTV)
Coventry building society is increasing its two, three and five-year fixed rates and its two-year tracker deal from Tuesday (14 March). The increases will apply to owner-occupier mortgages for new customers and existing borrowers looking to move house or remortgage. The new rates will be announced next week
Clydesdale Bank, part of the Virgin Money group, has cut the interest rates charged to existing 65% and 75% LTV customers who transfer to new products. Eligible customers may elect to transfer if they’re paying standard variable rate or when their fixed rate deal ends, for example. Clydesdale is offering a two-year fix at 4.4% with a £449 fee and a five-year fix at 4.02%, also with a £499 fee. Fee-free deals are at 4.6% (two-year fix) and 4.17% (five-year).

Sam Amidi at online mortgage broker Better.co.uk, said: “Halifax is one of the biggest lenders in the country and it is now flexing to closer to the best-buy deals as it has been sitting outside the top three. With other key lenders increasing rates in recent days, Halifax will see this as an opportunity to boost market share.

“With the Budget next week, it will be interesting to see what support the government plans on offering the property market as this has been stagnated for the past five months. With the UK narrowly avoiding recession and talks that Bank rate could be held at the next MPC meeting, this could be a chance to reignite the market and build consumer confidence.”

10 March: FCA Fears 356,000 Households Face Difficulties

The Financial Conduct Authority is telling lenders to do more to help customers struggling with mortgage repayments due to rising interest rates and the increased cost of living.

The regulator estimates that an additional 356,000 mortgage borrowers could face payment problems by the end of June 2024. This is on top of 200,000 households the FCA says are already in financial difficulty.

This is a reduced estimate compared to September 2022, when the FCA feared around 570,000 more borrowers would face financial difficulty as a result of increases to the Bank of England Bank rate, which determines the cost of mortgages.

At that point, the regulator expected the Bank rate to peak at 5.5%. But that estimate has now fallen to 4.5%, allowing the FCA to adjust its figures.

Payment problems are likely to arise when borrowers come off current low fixed rate mortgages and either must pay their lender’s much higher standard variable rate (known as SVR, currently running at an average of 6.90%), or remortgage to a higher fixed rate deal.

The regulator has calculated that on average, mortgage borrowers coming off fixed rate deals over the next year could end up paying an additional £340 a month on their mortgage.

The Bank rate currently stands at 4% after spiralling upwards from 0.1% in 2021. The next interest rate decision will be on 23 March, when an increase to 4.25% or 4.50% is possible as the Bank tries to quell the rate of inflation.

In its final guidance on how lenders should help mortgage borrowers, the regulator says it expects firms to support customers who ask for help by offering a range of measures to relieve payment pressure.

It follows a mortgage summit between the Chancellor Jeremy Hunt, the FCA and representatives from the mortgage industry in December.

The FCA says options to help struggling customers include:

restructuring a mortgage by extending the duration of the loan to reduce monthly payments
temporarily suspending monthly repayments
offering payment holidays
switching a loan to interest-only terms.

Mortgage borrowers with concerns are urged to contact their lender as soon as possible to discuss their options. Borrowers should be aware that making changes to their mortgage, even temporarily, could result in higher payments in future and that they pay back more overall.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Our research shows most people are keeping up with mortgage repayments, but some may face difficulties. If you’re struggling to pay your mortgage, or are worried you might, you don’t need to manage alone. Your lender has a range of tools available to help.

“Get in touch as soon as you have concerns, don’t wait until you’re about to miss a payment before doing so. Just talking to them about your options won’t affect your credit rating.”

FCA research has found borrowers aged 18-34 are more likely to be financially stretched than the rest of the working age population, as well as those living in London and the South East. It also found almost half of those in difficulty (47%) wrongly believe contacting their lender for support would damage their credit rating.

If a borrower agrees an option with their lender to pay less than the agreed amount in their contract, this will be reflected on their credit file. But just talking to their lender won’t affect their credit file or rating and nor will some other forms of support.

Laura Suter, head of personal finance at investment firm AJ Bell, said: “There is no hiding from the fact that the mortgage market is a terrifying place for the 1.4 million homeowners coming off a cheap fixed-rate deal and moving onto far higher rates this year.

“The FCA wants mortgage lenders to up their game when it comes to supporting customers who are struggling. It also wants to bust some myths, reassuring borrowers that enquiring about help won’t have a negative impact on their credit file and that lenders should offer tailored support.”
The government’s free money service MoneyHelper, as well as other free services including Citizens Advice, can offer impartial money and debt advice.

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9 March: Volatility Reflects Wholesale Market Trends

Fixed mortgage rates continue to be volatile in response to fluctuating wholesale lending markets, which heavily influence the price of mortgages, writes Jo Thornhill.

Swap rates – the interest rates at which banks lend to each other – have increased over the past week causing lenders to reassess the mortgage rates they offer to customers.

Economists are also questioning how much further the Bank of England Bank Rate (currently at 4%) has to climb. The next interest rate decision is due on 23 March.

Among today’s mortgage rate changes:

Accord Mortgages, the broker-only lender owned by Yorkshire building society, has increased fixed rates for new customers by up to 0.4 percentage points, effective tomorrow (10 March). Deals for house purchase will rise by 0.05 percentage points, while fixed rate remortgage products will increase by 0.33 percentage points (at 85% LTV) and by 0.4 percentage points (90% LTV)
Shawbrook Bank has bucked the trend of increases by cutting its mortgage rates for semi-commercial and buy-to-let (BtL) customers by up to 1.75 percentage points. Its specialist buy-to-let loan for between £150,000 and £1 million is cut from 8.24% to 6.29% and BtL loans over £1 million are now 5.69%. Semi-commercial mortgages of more than £1 million are now 6.49%
Foundation Home Loans has also cut rates for owner-occupier mortgages by up to 0.1 percentage points. The lender’s special fee-assisted five-year fixed rate deal (65% LTV) is at 6.59% – this deal has a £795 product fee (lower than its standard £995 product fee), a free valuation plus no application fee.

7 March: Residential Loan Rates Up, New-Builds Down

Skipton building society has increased fixed rates on selected residential purchase and remortgage deals by up to 0.38 percentage points, while cutting rates by up to 0.19 percentage points for new-build homes and government scheme mortgages, writes Jo Thornhill.

Among its rate increases, Skipton has pushed up the cost of its two-year fixed rate (60% LTV) deal by 0.38 percentage points to 4.75%. It has a £995 fee. Its fee-free two-year fixed rate (90% LTV) also rises to 5.29% – an increase of 0.13 percentage points.

But the lender’s fee-free two-year fixed rate for new-build properties is reduced by 0.07 percentage points to 5.73% (available up to 90% LTV).

Mortgages for government schemes, such as Help to Buy and First Homes, are also cut. The two-year fixed rate for shared ownership mortgages is now 5.47% – a reduction of 0.18 percentage points. This deal is available up to 90% LTV and has no fee.

TBS is increasing the rate on its five-year fixed rate mortgage deals (at 85% LTV) by up to 0.2 percentage points for purchase and remortgage. The new five-year fixed rates for borrowers with at least a 15% deposit will be available to new and existing mortgage customers from tomorrow.
Atom Bank, which operates an app-based service, has cut fixed mortgage rates for purchase and remortgage customers by up to 0.25 percentage points. It is offering a fee-free five-year fix (60% LTV) from 4.29% (higher rates are available at higher LTVs), and a two-year rate (90% LTV) at 5.04% with a £900 fee, for example. Among its deals for near prime borrowers (those with a lower credit score) it has a two-year fix at 6.89% (85% LTV) with a £900 fee, or a five-year fix at 7.04%, also with a £900 fee. Richard Harrison, Atom bank head of mortgages, said: “We are making rate reductions at a time when some lenders have begun to pass on a proportion of the recent increase in swap rates to customers.”

6 March: Existing Customers Benefit When Switching

Virgin Money is cutting its fixed rate mortgage range for existing customers by up to 0.26 percentage points, writes Jo Thornhill.

The new rates, effective from tomorrow (7 March), are available to existing mortgage customers looking to switch to a new deal.

The five-year fixed rate (65% LTV) is among the market leading deals at 3.99% – a cut of 0.16 percentage points. There is a £999 fee.

The two-year fixed rate (65% LTV) is now 4.37% – a cut of 0.16 percentage points. There is a £995 fee. The fee-free two-year fixed rate is cut by 0.26 percentage points to 4.6%.

Two, three and five-year fixed rates for existing borrowers with a higher loan to value ratio have also been cut by up to 0.21 percentage points.

Richard Walker, head of intermediary sales at Virgin Money, said: “We don’t believe our best rates should be saved just for new customers.

“With five year fixed rates starting from 3.99%, these changes to our existing customer range improve the options available for those looking for a new rate on their existing loan.”

3 March: Rising ‘Swap’ Rates Feed Through To Customers

Nationwide building society has increased rates by up to 0.21 percentage points across selected fixed and tracker mortgage products for new and existing customers, writes Jo Thornhill.

The lender is likely to be responding to the recent increase in wholesale swap rates – the interest rates at which the banks lend to each other, which determines how lenders price their fixed rate mortgages.

Virgin Money and HSBC have each increased rates in recent days (see stories below). This bucks the trend of falling mortgage rates across the market since the start of the year.

Nationwide is offering a two-year fix at 4.79% (75% LTV) for first time buyers with a £999 fee. The fee-free option is at 5.24%. The two-year fix for new customer homebuyers (80% LTV) is at 4.79% with a £999 fee, or fee-free at 5.09%.

Its new customer remortgage five-year fix (60% LTV) is now 4.19% – up 0.2 percentage points. It has a £999 fee.

Existing Nationwide borrowers will see increased rates on home mover, shared equity, additional borrowing, green additional borrowing, switcher and switcher additional borrowing products. The switcher five-year fix for existing customers (60% LTV) is priced at 4.04% (an increase of 0.1 percentage points) with a £999 fee.

‘Switchers’ is how Nationwide refers to existing customers remortgaging to a new deal.

Nick Mendes, mortgage technical manager at broker John Charcol, said: “Swaps rates have seen an increase over the last few days, partially down to the change in mood seen in the US.

“The Federal Reserve is now expected to keep interest rates higher for longer, and the expectation here in the UK is that the Bank of England will look to do the same. The market believes UK rates could rise to 4.25% and may not fall again until 2024.

“It shows how unpredictable rates can be. Anyone hoping to see a continuing fall in mortgage rates – including the current sub 4% deals – could now have to wait a little longer.”

Henry Jordan, director of home at Nationwide, said: “Over the last few months, we have continued to lower rates across our mortgage range, including doing so four times this year.

“However, given the recent increase in swap rates, we are having to make some small increases on selected mortgage rates so that we can continue to balance our support for all types of borrowers with the need to ensure our rates remain sustainable.”

The Mortgage Lender, part of Shawbrook Bank, has cut rates across its two- and five-year fixed rate buy-to-let loans by up to 0.4 percentage points. The broker-only lender’s Fee Saver Remortgage product is cut by the full 0.4 percentage points to 5.79%. This is a five-year fix at 75% LTV with no fee. TML’s five-year fixed buy-to-let rate at 75% LTV is cut by 0.2 percentage points to 4.64%. There is a 5% fee. Rates on mortgages for houses in multiple occupation (HMO), for professional landlords, have also seen a cut of up to 0.25 percentage points.

28 February: Rising Wholesale Borrowing Costs Threaten Fixed Offers

Skipton building society is the latest lender to reduce the cost of its fixed-rate mortgages – its fourth rate cut this month. But HSBC is set to increase fixed rates across its range from tomorrow, and experts suggest fixed rates across the market may soon start climbing again.

Skipton is cutting rates for residential and buy-to-let customers by up to 0.24 percentage points. It is offering a fee-free two-year fixed rate for residential borrowers at 5.16% (90% LTV). At 60% LTV, borrowers can get a five-year fix at 4.16% with a £995 fee.

Despite some lenders continuing to nudge down their fixed rate offerings as competition in the market remains hot, brokers say fixed-rate reductions are likely to soon go into reverse.

Wholesale ‘swap’ rates – the interest rates at which banks lend to each other – have started to creep up. This will inevitably feed through to the rates lenders charge their mortgage customers.

Today (28 February), swap rates are at the highest they have been so far this year. Two-year swaps are just under 4.5%, while five-year swaps crept above 4%.

According to online mortgage broker Better, the market is already reacting, with the lowest two-year fixed mortgage rate deals increasing from 4.02% to 4.12%.

And although the lowest five-year fixes are still below 4%, some providers have tweaked their deals upwards in recent days or removed their best buys to control business levels (see stories below).

From tomorrow (1 March) HSBC will increase its standard variable rate (SVR) from 6.79% to 6.99% and the SVR for buy-to-let customers will also rise from 6.35% to 6.85%.

Fixed rate residential purchase, switcher products and remortgage deals will all be increased at the same time, with the details yet to be announced. Brokers say they are hopeful HSBC’s five-year fix at 3.99% (60% LTV) will be retained.

Experts also predict the Bank of England could increase Bank Rate again when the monetary policy committee (MPC) next meets on 23 March.

Richard Campo, founder of mortgage broker Rose Capital Partners, believes mortgage rates have hit the bottom for this cycle: “We may now be seeing the end of falling mortgage rates. We don’t have a crystal ball so this is what I’m suggesting from my reading of the money markets. But unless something changes geopolitically or economically, I feel that even if Bank Rate settles at 4%, then a five-year fixed rate mortgage at around 4% looks like exceptional value.

“There have been some interesting movements in the money markets over the past week, fuelled by the sentiment that interest rates haven’t yet reached their peak in this cycle. This is going to have an impact on the pricing of fixed rate mortgages. In the long run I think we’ll see the best five-year fixed rates settle at around 4% to 4.5%.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘‘All eyes are focused not only on the MPC’s decision next month, but also the voting decisions. Hawks and doves are already vocalising their thoughts. Once the market feels the tide has turned and Bank Rate has peaked, expect swap rates to drop quickly.

“While not every lender is wholly reliant on the money markets and swap rates for its lending capacity, they will still influence where it prices. Even those lenders with deep pockets will observe movements and what the competition is doing in order to preserve service levels.

‘Borrowers can’t assume fixed rates will continue to edge lower. As we have seen in the past week the best deal can disappear as quickly as it appears.”

27 February: Lenders Vie For Business As Lowest Rates Pulled

More lenders have slashed fixed rate mortgage pricing as competition remains strong, writes Jo Thornhill.

Newcastle building society has cut rates on its five-year fixed rates by up to 0.79 percentage points for mortgages at 90% and 95% LTV. At 90% LTV it is offering a five-year fix at 4.8% and at 95% LTV the rate is 5.25%. Both deals are for purchase and remortgage customers
The Mortgage Works, the specialist lending arm of Nationwide building society, has cut rates on five-year fixed deals by up to 0.1 percentage points for existing customers. Its five-year fix switcher product is now at 5.09% (75% LTV) with a 3% fee. The five-year rate and fee are the same for professional landlords with homes with multiple occupancy (HMO) mortgages and large portfolio HMO borrowers
Buy-to-let lender Zephyr Homeloans has cut its five-year fixed rate deals across the board by 0.3 percentage points. Its standard five-year rate is 5.29% (65% LTV). This is for properties with an A to C-rated energy certificate. Zephyr’s deal for new build properties and flats above commercial premises has also been cut to 5.29% (65% LTV) and the deal for houses of multiple occupancy multi-unit blocks is now 5.59% (65% LTV).

These latest cuts come in the wake of price increases last week by some lenders who were offering the most keenly priced five-year fixed rates at under 4%.

Virgin Money and Platform, part of Co-operative Bank, were offering five-year fixed rates at 3.95% and 3.75% respectively – the cheapest on the market. But Platform has since withdrawn its deal and Virgin increased its rate to 3.99%.

The next Bank of England decision on Bank Rate – currently at 4% – will be on 23 March.

24 February: 50% LTV Tier Allows Reduction In Rates

Coventry for Intermediaries, the broker arm of Coventry building society, is cutting selected residential rates by up to 23 percentage points. It has also launched 50% LTV products for new and existing customers.

Fixed rate products for existing buy-to-let customers have also been reduced by up to 70 percentage points.

The building society now has a five-year fixed rate offer, for 50% LTV customers, that joins the growing list of sub-4% deals (see stories below) with a 3.96% rate, although there is a £999 fee.

This deal, which is available for residential purchase and remortgage purposes, offers a choice of £350 cashback or a remortgage transfer service.

Its two-year fixed rate deal at 4.62% with an LTV of 85% and a £999 fee, available for residential purchase and remortgage purposes.

23 February: Lenders Continue To Lower Rates

Online searches for mortgage rates soared by more than 500% in the year to November 2022, with borrowers seeking information and reassurance as interest rates climbed, writes Jo Thornhill.

The findings, from broker Better.co.uk, show Google searches for ‘mortgage rates’ averaged around 110,000 per month during the 12-month period and increased by more than 230% in the three months to November 2022.

The number of searches around house prices also increased dramatically, up by 172% over the past year.

Better’s research also highlights the impact of the cost of living crisis, with Google searches for information on energy bills rising by 819% over the year.

The research comes as lenders across the market continue to tweak fixed rates:

Clydesdale Bank and Yorkshire Bank, brands that form part of the Virgin Money banking group, have followed parent company Virgin in increasing fixed rates by up to 0.09 percentage points for new customers from this evening (23 February). Both brands offer a residential purchase or remortgage fee-free two-year fix at 5.33% (85% LTV) – an increase of 0.04 percentage points. Buy-to-let rates are also increased. There is a two-year BTL fixed rate at 5.32% (60% LTV) – up 0.09 percentage points, with a £999 fee, or a two-year fix at 5.09% (60% LTV) – up 0.05 percentage points with a £1,999 fee. Rates have also been adjusted upwards for existing borrowers looking to remortgage. The five-year fix at 90% LTV is increased by 0.04 percentage points to 4.98%
Aldermore has cut rates by up to 1.34 percentage points for owner-occupier mortgages and by up to 0.75 percentage points for buy-to-let customers. For residential borrowers it is offering a five-year fixed rate at 5.74% (80% LTV) with a £999 fee. Buy-to-let landlords with one property can get a five-year fix at 5.54% (75% LTV) with a 1.5% fee – or the rate falls to 5.44% for properties with an Energy Performance Certificate (EPC) rating of A, B or C
Keystone, the buy-to-let lender, has launched a new range of deals with lower rates but a higher set up fee of 5%. It is offering a five-year fixed rate at 5.29% (65% LTV) or at 5.39% (75% LTV). For multi-occupancy properties (HMO) rates start from 5.54% (65% LTV).
NatWest has cut fixed rates by up to 0.31 percentage points across residential purchase deals and buy-to-let loans, effective from tomorrow (Friday 23 Feb). Two and five-year fixed rates for purchase customers are cut by 0.16 percentage points and 0.11 percentage points respectively. It is offering a two-year fixed rate for purchase customers at 4.58% (60% LTV) with a £995 fee. The five-year fixed buy-to-let rate is 4.69% (60% LTV) with a £995 fee (down 0.31 percentage points).

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22 February: Big Guns Fight For Market Share

HSBC and Skipton building society have each cut their fixed mortgage rates in the latest salvo from an increasingly competitive market, writes Jo Thornhill.

HSBC has reduced rates across its fixed mortgage products for new and existing customers by up to 0.35 percentage points. It is the lender’s fourth rate cut this year. Three-year fixed rates start from 4.29% (60% LTV) with a £999 fee. It has also added a sub-4% 10-year fixed rate deal at 3.89% (at 60% LTV) to the range, which joins its existing five-year fix at 3.99% (60% LTV). Both sub-4% deals have a £999 fee
Skipton building society has reduced rates on its residential and buy-to-let mortgage ranges by up to 0.31 percentage points and increased its maximum residential home loan size from £1 million to £3 million (up to 75% LTV). It is offering a five-year fixed rate at 4.35% (60% LTV) with no fee. Its two-year rates start from 4.54% (75% LTV) with a £995 fee
Fleet Mortgages, the buy-to-let broker-only lender, has launched two-year fixed rate deals for standard and limited company borrowers from 5.69%. Mortgages for houses of multiple occupancy and blocks of flats are available form 5.79%. Loans are available up to 75% LTV with a fee of 2%. Five-year fixes have also been unveiled starting from 4.79% with a 5% fee. Fleet cut rates on its seven-year fixed rate mortgages earlier this month.
The Mortgage Works, the specialist buy-to-let lender owned by Nationwide building society, has cut selected fixed rates by up to 0.3 percentage points. It is offering a five-year fix for purchases for limited company borrowers at 4.99% with a 3% fee (75% LTV). Landlords with houses of multiple occupancy (HMO) can get a two-year fix at 4.59% with a 3% fee (75% LTV) and borrowers who own and let multiple HMO properties can get a five-year fixed rate at 4.99% with a 3% fee (also 75% LTV).

21 February: Lender Bucks Trend Of Cutting Rates

Virgin Money has launched a range of fixed rate mortgage deals for first-time buyers and those moving home. But though the new products include cashback incentives and free valuations, the rates represent an increase of up to 0.26 percentage points on Virgin’s previous fixed rate deals, writes Jo Thornhill.

It comes the day after the lender raised rates for residential remortgage customers by up to 0.25 percentage points (see stories below). Virgin has also cut buy-to-let fixed rates by up to 1.5 percentage points.

Virgin’s two-year fixed rate for residential purchase customers at 75% LTV is 4.78% – 0.15 percentage points higher than the old product. There is a £995 fee, but the deal offers £1,000 cashback and a free valuation.

At 90% LTV, the two-year fixed rate is 5.25% – 0.26 percentage points higher.

Rates are lower for borrowers who choose to pay a higher upfront fee, with Virgin offering a two-year fixed rate at 4.49% (75% LTV) or 4.9% (90% LTV), with a £1,495 fee.

Richard Walker, Virgin’s head of intermediary sales, said: “Our new range of short term exclusive rates offers even more options for those looking to purchase a new home, whether a home-mover or a first time buyer.

“We remain supportive of those with smaller deposits with 90% LTV two-year fixed rates starting from 4.90%.”
For buy-to-let borrowers, Virgin is offering a five-year fixed rate remortgage deal at 4.64% (50% LTV) with a £3,995 fee for ‘portfolio’ landlords (those who own and let out multiple properties). Two-year rates start from 4.73% (50% LTV).

21 February: Competition Keeps Fixed Rates Keen

Mortgage experts say sub-4% fixed rate deals aren’t about to disappear, despite the recent spike for lenders in the cost of providing fixed rates to customers, writes Jo Thornhill.

Wholesale ‘swap’ rates – the interest rates at which banks lend to each other – have been moving a lot in recent days. This is the rate at which mortgage lenders must borrow the money to then lend out to their mortgage customers.

Lenders add their own margin on top, so when swap rates rise, so too do the mortgage rates homeowners pay.

The recent rise in swap rates is one of the reasons behind Virgin Money’s increase to fixed remortgage rates yesterday (see story below). But despite the move – which bucks the trend of the past month, which has seen fixed mortgage rates fall across the market – brokers are confident that intense competition will keep mortgage prices low.

Virgin has kept its five-year fixed rate at under 4%. Other lenders including First Direct, Halifax, Nationwide, NatWest, Santander and Yorkshire building society, all have five-year and 10-year fixed rate deals priced below the Bank of England Bank Rate (4%).

Yesterday Platform, part of Co-operative Bank, launched a market-leading five-year fix at 3.75%, although this is only available at 60% LTV with a steep £1,999 fee and it is for a minimum mortgage size of £400,000.

Broker-only lender Platform is offering other five-year fixed rate options from 3.85% (60% LTV) with a £1,499 fee or at 3.89% with a £999 fee, for example.

Tessa Skot, chief operating officer at online broker Better.co.uk, said: ‘There’s no cause for panic – not all lenders are looking to make similar adjustments to Virgin Money.

“Virgin is likely being more conservative than other lenders in reaction to swap rate movement, and is also looking to maintain prompt service levels in response to increased customer demand.

“We often see that, when a lender has received a high volume of applications, they temporarily increase rates for new applications to help maintain the service levels customers expect on the applications they have already received. When these applications have been processed, a lender often then lowers interest rates again.

Mark Harris, chief executive of mortgage broker SPF Private Clients, has this advice for borrowers looking for a new deal: “While the general trend for fixed-rate mortgages has been down over the past few weeks, we expect to see pricing go up and down over the next six months with no visible trend.

“Borrowers may be tempted to wait for rates to fall but there is a danger they might not. A potential option would be a base-rate tracker mortgage with no early repayment charges, enabling you to move onto a fixed rate should pricing come down further.

“Another option could be to take a two-year fixed-rate mortgage with a view to taking a longer-term fix when that comes to an end, in the hope that they may then be cheaper.”

Figures released today by HM Revenue and Customs also highlight how higher mortgage rates are taking their toll on the housing market.

Data for stamp duty receipts show there were 77,390 residential property sales in January – a fall of 7% annually and down 27% since December 2022. For non-residential sales there were 8,500 transactions – an 11% annual fall, or a drop of 3% month on month.

Gareth Lewis, commercial director of property lender MT Finance, says: “Volumes are relatively similar to pre-pandemic levels which is encouraging. But on the other hand, transaction levels are nowhere near where they need to be.

“We still need to find a way to stimulate the market and enable more people to buy property, as many are struggling with affordability. There isn’t an easy solution but something has to be done to enable more to get onto the first rung of the ladder.

“It makes sense that January’s transactions would be down on December’s and in the coming months, we expect to see more of a downward trend.”

20 February: Virgin Increases Cost Of Remortgage Deals

Virgin Money has increased rates across its fixed-rate remortgage range by up to 0.25 percentage points, as costs fall across the wider mortgage market, writes Jo Thornhill.

From 8pm this evening, Virgin’s two-year fixed rates will rise by 0.2 percentage points to 4.79% (65% Loan to Value) and 4.89% (75% LTV). Neither deal charges an arrangement fee.

Virgin’s three-year fixed rate will increase by a steeper 0.25 percentage points to 4.59% (75% LTV).

The lender’s five-year fixed rate will also be nudged upwards by 0.04 percentage points to 3.99% (65% LTV), with a £995 fee.

However, Virgin still remains among a small group of lenders offering five-year fixed rates at under 4%. They include First Direct, HSBC, Santander and Yorkshire building society.

20 February: Five-Year Fix Available Below 4%

Santander has cut its fixed mortgage rates and is offering a five-year fixed rate deal at 3.99%, joining a glut of other lenders to bring five-year fixes down under 4%, writes Jo Thornhill.

Its five-year fixed rate at 60% LTV, available from tomorrow, has a £999 fee. The new rate represents a 0.19 percentage point cut by Santander on its previous five-year fixed deal, which was itself launched earlier this month.

Other lenders, including HSBC, Virgin Money and the Nationwide and Yorkshire building societies are already offering five-year fixed rates at 3.99% (see stories below).

Santander is also cutting other fixed residential mortgage rates by up to 0.5 percentage points and buy-to-let rates by up to 0.3 percentage points, from tomorrow.

It is offering a fee-free two-year fix at 75% LTV from 4.79% for residential borrowers. It has a two-year fix at 5.59% for remortgage buy-to-let customers at 75% LTV, with no fee.

Other lenders to cut rates include:

Landbay: specialist buy-to-let lender Landbay has cut rates on mortgages for landlords of multiple occupation properties and multi-unit freehold blocks by up to 0.3 percentage points. For standard buy-to-let properties rates have been cut by up to 0.15 percentage points. Two-year fixed rates start from 5.29% with a two per cent fee or from 4.79% with a three per cent fee
Foundation Home Loans: Foundation has cut rates across residential and buy-to-let mortgages by up to 1.5 percentage points. The lender has improved the rate on its owner-occupier Green ABC+ product for properties with an energy performance certificate (EPC) rating of C and above. The new rate is 6.44% down from 7.89%. Buy-to-let rates have been reduced by 1.8 percentage points across its Green product range. The five-year fixed rates, available up to 75% LTV, will start at 6.44% with a 1.25% fee, for example.

15 February: House-Buyers Enjoy Increased Choice Of Loan Deals

Nationwide, the world’s largest building society, is adding more weight to the recent swathe of mortgage rate reductions by lowering the cost of its fixed and tracker deals by up to 0.70 percentage points, writes Laura Howard.

From tomorrow (16 February), starting costs for five-year fixed rate mortgages at Nationwide will be pegged down by 0.19 percentage points to 3.99%.

The move brings it into line with rivals Virgin Money, Yorkshire building society and First Direct, which already offer sub-4% five-year fixes (see stories below).

The newly-priced five-year fix – available with a 40% deposit – comes with a £999 fee, although a fee-free option is available priced at 4.18%.

Reductions are less generous on tracker mortgages, which follow movements in the Bank of England Bank rate (currently 4%). Costs for a two-year deal start at 4.24% with a £999 fee, having been cut by just 0.05 percentage points.

Existing customers at Nationwide looking for a new deal will see reductions of up to 0.41 percentage points, with rates starting from 3.94% for a five-year fix, with a £999 fee.

The lender promises that ‘switchers’ will be offered rates that are the same or lower than the equivalent deal for new customers.

The biggest cost reductions, however, are reserved for first-time buyers, who will see up to 0.70 percentage points knocked off selected two, three and five-year fixes.

From tomorrow, the first-time buyer five-year fix, which requires a deposit of just 5%, will be priced at 4.99% with a £999 fee. The equivalent no-fee deal, which has seen the biggest reduction of 0.7 percentage points, will be priced at 5.09%.

First-timers at Nationwide can continue to choose between £500 cashback or free standard legal fees.

The latest moves are the fourth round of mortgage rate reductions that Nationwide has announced since the start of the year and the ninth since last Autumn’s mini-Budget.

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14 February: 3.99% Deal Broadens Range Of Sub Bank Rate Offers

First Direct is cutting fixed mortgage rates across its range by up to 1.05 percentage points. It is also joining the ranks of lenders offering a five-year fix at under 4%, further fuelling competition in this sector of the market, writes Jo Thornhill.

The bank says its five-year fixed rate will be priced at 3.99% after a 0.25 percentage point cut (60% LTV). There is a £490 fee.

Virgin Money, HSBC and Yorkshire building society are offering sub-4% five-year fixes – the first time rates have dipped below 4% since September last year.

First Direct’s 10-year fixed rate has seen the biggest cut of 1.05 percentage points and is now at 4.04% (60% LTV) with a £490 fee. The two-year fixed rate starts at 4.49% (60% LTV), also with a £490 fee. The bank’s mortgages are available to all new and existing customers.

Carl Watchorn, head of mortgages at First Direct, said: “These latest rate reductions are the most significant to be implemented to the First Direct mortgage range since last autumn. Our biggest rate cuts are across our 10-year range as we recognise that many customers will want long-term peace of mind at the moment.”

Halifax Intermediaries has cut rates by up to 0.36 percentage points for purchase and remortgage borrowers – effective tomorrow (15 February). It is offering, through brokers, a 10-year fixed rate at 3.99% (60% LTV) with a £999 fee. The same deal is 4.04% at 75% LTV.
Barclays has cut its two- and five-year fixed rate mortgages by up to 0.44 percentage points for residential and buy-to-let customers. It is offering a two-year fixed-rate at 4.3% (60% LTV) with a £999 fee – or at 4.75% at 75% LTV – both are residential rates. It has introduced a five-year fixed-rate for buy-to-let borrowers at 4.75% (75% LTV) with a £1795 fee. The bank has also said it is withdrawing its help-to-buy mortgage range from tomorrow (15 February)
Accord, the specialist lending arm of Yorkshire building society, has cut fixed rates for buy-to-let (BTL) borrowers by up to 0.24 percentage points, effective from tomorrow (15 February). It is offering a five-year fix at 5% (65% LTV) with a £495 fee. It has a two-year fix for house purchase at 5.84% (75% LTV) with no fee and £500 cashback. The fee-free two-year fix for remortgage is now 5.71% (75% LTV).

13 February: Move Comes As Lenders Continue To Cut Rates

From next month, NatWest will allow mortgage customers to make overpayments of up to 20% of the outstanding balance per year – the previous maximum was 10%, writes Jo Thornhill.

Most lenders allow borrowers to make penalty-free overpayments each year of up to 10%.

NatWest says that, for customers making lump sum overpayments in excess of £1,000, this will mean their monthly mortgage repayment will be recalculated. This will reduce monthly mortgage repayments afterwards – so effectively the benefit of the overpayment is calculated immediately.

For those making overpayments less than this amount, their repayments won’t change, but it will mean they’ll have a lower balance to refinance when it comes to a new fixed term deal.

The bank has said it will write to customers who have a regular monthly overpayment of more than £500 a month (or more than 8% per year) to let them know about the increase to its overpayment allowances.

Mark Harris at broker SPF Private Clients said: ‘NatWest joins a handful of lenders which allow 20% overpayments, including Metro Bank and Atom Bank. Suffolk Building Society will even allow up to 50 per cent overpayments without penalty.

“But given household incomes are so under pressure at the moment, it is hard to see whether many borrowers will be able to take advantage of these increased limits, even if they wanted to. For most, 10% overpayments are more than enough.

“Research by Lifesearch estimated that only 7% [of borrowers] overpaid on their mortgage during the first half of 2021. But anecdotally overpayments are rarely made to their maximum capacity. With this in mind, it’s unlikely that other lenders will follow suit.”

Mortgage rates have also continued to fall across the market as lenders jostle for business. The latest providers to make changes include:

TSB reducing fixed rates for purchase and remortgage customers by up to 0.65 percentage points. Its two-year fix at 60% LTV is now 4.54% with a £995 fee. At 85% LTV the rate is 5.34% and at 95% LTV it is 5.84%
The Mortgage Lender cutting fixed residential rates by up to 0.66 percentage points and buy-to-let rates across its range (fixed and tracker rate deals) by up to 0.9 percentage points.
MPowered Mortgages cutting fixed rates by up to 0.7 percentage points. It is offering a three-year fixed rate at 4.36% from 60% LTV. Its 10-year fix is now 4.29% at 60% LTV. It follows a rate cut of up to 0.31 percentage points earlier this month.

In further relief for mortgage borrowers, Moneyfacts has reported the number of mortgage deals available has increased to 4,341 – up from 3,643 last month.

The latest product count sits above 4,000 for the first time since August 2022, a positive sign of stability returning to the market after product choice plummeting after the mini-Budget in September last year.

The average shelf life of mortgage deals also increased to 28 days, the joint highest since March 2022, and a significant improvement on the 15 days seen last month.

10 February: Santander Joins Trend To Chop Fixed Rate Deals

Santander and the Yorkshire and Skipton building societies are among a slew of lenders to have cut fixed mortgage rates in recent days, writes Jo Thornhill.

A round-up of the latest rate changes includes:

Santander: fixed rates have been cut by up to 0.24 percentage points for purchase, remortgage and new build mortgages. The new five-year fixed rate for purchases is now 4.22% at 60% LTV with a £999 fee. The rate at 95% LTV is now 5.64% with no fee
Yorkshire building society: fixed rates cut by up to 0.25%. It is offering a five-year fix at 3.98% at 75% LTV for remortgage customers. There is a £1,495 fee. The five-year fix for home purchase customers is 4.09%. The lender’s five-year fixed rate at 90% LTV is now 4.77% with no fee and £1,000 cashback
Skipton building society: fixed rates have been cut by 0.13 percentage points for high LTV deals. Its five-year fix for remortgage customers at 80% LTV is now 4.54%. For borrowers at 85% LTV the rate is 4.57%. Both deals have a £995 fee and £250 cashback. Two year fixed rates at 85% LTV are now 4.89% with a £995 fee
MPowered Mortgages: fixed rates cut by up to 0.31 percentage points for homebuyers and remortgage borrowers over two and five year terms. Two-year fixed rates start from 4.54% for home purchase and 4.39% for remortgage – both have a £1,999 fee, although remortgage customers get £500 cashback on completion. Fee-free versions start at 4.94%. Five-year fixed rates are 4.13% for remortgage and 4.14% for purchases
Bluestone Mortgages: specialist lender Bluestone, which focuses on non standard mortgage applications, has cut fixed rates on its residential and buy-to-let mortgage ranges by up to 0.7 percentage points
Hampshire Trust Bank: the rate on specialist lender HTB’s five-year fixed professional landlord mortgage has been cut by 1.3 percentage points to 5.99%. Two-year rates start from 5.69%
Coventry building society: fixed rates have been cut by up to 0.19 percentage points for purchase and remortgage customers. It is offering a five-year fix at 4.16% at 65% LTV with a £999 fee. The two-year fix is 4.37% at 65% LTV – also with a £999 fee
Metro Bank: fixed rates have been cut across residential and buy-to-let mortgages. For residential customers two-year fixed rates at 60% LTV start from 4.99% or from 5.39% at 75% LTV. Three-year fixed rates have been launched starting at 4.39% at 60% LTV.

Ben Merritt, director of mortgages at Yorkshire Building Society, said: “We’re actively monitoring market developments and are committed to taking every possible opportunity to pass on savings to help people reduce what is, for most, their biggest monthly outgoing.”

8 February: Virgin Joins HSBC With Sub-Bank Rate 5-Year Deals

Virgin Money has slashed its mortgage rates by up to 0.51 percentage points and launched a sub-4% five-year fixed rate, while Dudley building society and Together have also trimmed rates down, writes Jo Thornhill.

Yesterday, HSBC announced a sub-4% five-year remortgage fix, dipping below the current Bank rate set by the Bank of England (see story below).

As the mortgage rates war continues apace, here are the latest changes:

Virgin Money has cut fixed rates across its range. It is offering a broker-only remortgage five-year fixed rate at 3.95% (down 0.25 percentage points) – available at 65% LTV. There is a £995 fee. Its five-year fixed rate for purchase customers is 3.99% (down 0.18 percentage points) at 65% LTV with a £1,495 fee. The fee-free two, three and five year fixed rates for remortgage customers are cut by up to 0.51 percentage points and start from 4.1% at 65% LTV. These are all available through brokers
Dudley building society has cut rates on fixed and discounted rate deals and revamped its range by adding expat buy-to-let and holiday home mortgages. Among its new offering is a two-year fixed rate for residential mortgages at 5.59% at 90% LTV and it has an expat residential mortgage at 5.89% at 80% LTV
Together, the specialist lender which offers mortgages to borrowers who might be turned down by mainstream lenders, has cut fixed rates for residential mortgage customers by up to 0.25 percentage points. It is offering a two-year fixed rate at 8.2% and a five-year fix at 7.95%. Its bridging loan rates have been reduced by up to 0.14 percentage points.

Richard Walker, head of intermediary sales at Virgin Money, said: “Many borrowers, including first time buyers, are looking for a longer term product which guarantees a fixed rate and a consistent payment for the term of the product.

“Our new five and 10-year fixed rates at 95% LTV offer exactly that, and mean more aspiring homeowners can get their foot on the housing ladder.

“We’ve also refreshed our range of intermediary exclusives, including a competitive five-year fixed rate starting from 3.95%, as we continue to support many types of customers with their mortgage needs.”

7 February: HSBC Offers 5-Year Deal Below Bank Rate

HSBC has cut its fixed mortgage rates by up to 0.45 percent points and is offering a five-year deal priced below the Bank of England bank rate of 4%, writes Jo Thornhill.

This is the first five-year fixed rate at under 4% since September 2022. The new rate is 3.99% (down from 4.29%) for remortgage customers with at least 40% equity in their home. There is a £999 fee.

It is offering a fee-free five-year fixed rate at 5.19% (down by 0.45 percentage points) for first time buyers with a 5% cash deposit. The equivalent two-year first time buyer fixed rate is now 5.84% (down 0.35 percentage points).

It is HSBC’s third rate cut of the year, which sees reductions across almost every fixed rate mortgage for new and existing residential borrowers. It has also made reductions to buy-to-let mortgage deals of up to 0.3 percentage points.

Nationwide building society has cut fixed rates again – the third time this year. It has cut by up to 0.75 percentage points across its range. It is offering a 10-year fix at 4.34% for first time buyers at 75% LTV and with a £999 fee. Its five-year rate for remortgage customers is 4.49%. This is at 85% LTV and also with a £999 fee.

Broker-only lender Foundation Home Loans has cut rates by up to 0.9 percentage points for residential and buy-to-let mortgages. Its five-year fixed rate deal for owner-occupier borrowers is 6.59%, at 75% LTV with a £1,495 fee. Buy-to-let fixed rates now start from 5.89%.

Sam Amidi, head of mortgages at online broker Better.co.uk, said: “We now expect to see more lenders following HSBC. The price war is in full swing with HSBC taking the big leap of offering sub-4% fixed rates over five-years. This is positive for the consumer and should be an encouraging sign of what the year will hold.”

See related updates below

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6 February: Number Of Available Deals Increasing Rapidly

Skipton building society and Gen H Mortgages are the latest lenders to cut fixed mortgage rates, as one online broker reports a record month for home loan enquiries, writes Jo Thornhill.

Skipton building society has cut its fixed rates by up to 0.18 percentage points. It follows a cut of up to 0.42 percentage points to fixed mortgage rates last month. Its five-year fix at 90% LTV is now 4.6%. This deal is for remortgage customers and has a £995 fee, with £250 cashback on completion (rates are effective from 7 February). The five-year fix for purchase at 90% LTV is 4.83%. This also has a £995 fee with £1,000 cashback. Buy to let borrowers can get a two-year fixed rate at 5.3% (75% LTV with a £995 fee).
Generation Home (Gen H Mortgages) has cut its fixed rate mortgage range by up to 0.42 percentage points. Its fee-free five year fix is 4.57% at 75% LTV. The rate falls to 4.52% for borrowers who opt to pay a £999 arrangement fee. The fee-free five year fixed rate at 80% LTV is 4.63% – or 4.61% with a £999 fee.

The number of available mortgage deals increased last month. There are around 4,350 residential mortgage deals on the market, according to Moneyfacts, compared to 3,640 at the start of the year and just 2,560 since last Autumn’s mini-Budget. But it is still a lot lower than the 5,300 deals available in December 2021.

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2 February: Bank Rate Increase To 4% Expected But Still Painful

Mortgage borrowers on tracker and standard variable rate deals are set to see their monthly repayments rise after the Bank of England today increased the Bank Rate by 0.5 percentage points from 3.5% to 4%, writes Jo Thornhill.

A homeowner with a £200,000 repayment tracker mortgage over 25 years will see their monthly payment rise by around £50 from £1,052 per month to £1,108. This is assuming a competitive tracker rate of 0.47 percentage points above the Bank Rate.

A similar borrower paying the market average standard variable rate (currently 6.7% according to our online broker partner Better.co.uk) will pay £63 more per month from £1,376 to £1,439 – if their lender increases its SVR by the full 0.5 percentage points.

It is the 10th increase to interest rates since December 2021, and Bank Rate is now at its highest level in 15 years.

An estimated two million homeowners are on variable rate deals. A borrower with a £200,000 repayment mortgage, who has been on their lender’s standard variable rate during the past 12 months, could be paying up to £450 a month more in mortgage costs now compared to December 2021 – when the base rate was 0.1%, seeing their monthly bill go from £994 in 2021 to around £1,450 now.

While competitive fixed mortgage rates have been falling in recent weeks, today’s Bank rate rise is likely to further dampen activity in the already subdued housing market.

The rate of annual house price growth slowed from 2.8% in December 2022 to 1.1% in January 2023, according to Nationwide Building Society’s latest house price index. Prices fell 0.6% month on month and are now 3.2% below where they stood in August 2022.

Avinav Nigam at real estate investment platform, IMMO, says: ‘Rising interest rates have major consequences for the housing market. There is an immediate increase in the cost of mortgages for borrowers on variable-rate mortgages, which could mean an increase in the supply of properties for sale, with negotiating power shifting to buyers.

“Higher interest rates alongside labour and material price inflation mean that building new homes is getting harder and more expensive. Many projects are being paused, reducing future supply.”

Alex Lyle, director of London estate agency Antony Roberts, says: “Given that it’s the 10th rate rise in a row and we are already working with a smaller pool of buyers, this latest rate rise will not be helpful to the market.’

The regulator, the FCA, recently published guidance for lenders around forbearance and how they can help mortgage borrowers who are struggling. It came as it released figures estimating around 750,000 households are at risk of mortgage default over the next two years due to rising interest rates and escalating costs.

1 February: Competition Prompts Cuts To Attract Borrowers

Aldermore has cut mortgage rates for residential and buy-to-let borrowers by up to 0.97 percentage points. It is the second time the lender has reduced rates this year, writes Jo Thornhill.

The bank has announced the launch of a limited run of fixed rate owner-occupied and buy-to-let mortgages and is offering a two-year fixed rate at 5.49% at 75% LTV with no fee. The same fixed interest rate is also available over five years, also at 75% LTV with no fee. These deals are for owner-occupied mortgages.

For buy-to-let borrowers, Aldermore has a five-year fixed rate at 5.54% at 75% LTV, and with a 1.5% fee. Multi-property investors and company landlords can get a five-year fixed rate at 5.44% (also 75% LTV) with a 1.5% fee.

Yesterday, NatWest and Virgin Money announced cuts to their mortgage rates:

NatWest has reduced rates on its residential mortgage deals by up to 0.24 percentage points and by up to 0.12 percentage points for buy to let borrowers. It is offering a two-year fixed rate deal for residential purchase customers at 4.93% – this deal is at 60% LTV and has no fees. It has a fee-free five-year fix for purchases at 4.68% at 85% LTV. Remortgage deals see the biggest cuts. The two-year fixed rate is cut by 0.24 percentage points to 4.88% – at 75% LTV. There is a £995 fee. At the same time buy to let deals have been cut by 0.12 percentage points. The lender is offering a five-year fixed rate for remortgage or purchase customers at 5.1% – this is at 75% LTV with a £1,495 fee.

Virgin Money has cut rates on purchase, remortgage and buy to let loans by up to 0.2 percentage points. It is the lender’s second rate cut in as many weeks. It is offering a five-year fixed rate for purchase customers at 4.17% at 65% LTV. There is a £1,495 fee. It has a 10-year remortgage fixed rate at 3.99% at 75% LTV with a £995 fee. Its buy to let remortgage five-year fixed rate is 4.59% at 50% LTV with a £3,995 fee.

See related stories below

31 January: BoE Sees Approvals Slump In 2022

Mortgage approvals have slumped to their lowest level since May 2020, according to the latest data from the Bank of England’s Money and Credit Report, writes Jo Thornhill.

Loans for house purchase fell to 35,000 in December last year – down from 46,000 in November. It was the fourth consecutive monthly fall in approvals.

Once figures from the initial onset of the Covid-19 pandemic and the period immediately after are excluded, house purchase approvals are now at their lowest level since January 2009, when the number was 32,400.

The total value of new approvals fell to just £8.1 billion last month, down from £10.2 billion in November. The six-month average for monthly mortgage approvals is 62,180 with a value of £14.1 billion.

Approvals for remortgaging (with a different lender) fell to 26,100 in December last year, down from 32,600 in November – the lowest level seen since January 2013 (25,800). In terms of value, there was a month-on-month decline from £6.9 billion to £5.6 billion.

Again, the six-month average for remortgages is 45,938 approvals at a value of £9.4 billion.

The main driver behind the slow down in mortgage activity has been the steep increase in mortgage rates. Bank of England figures show the interest rate paid on new mortgages increased by 0.32 percentage points in December to 3.67%.

This is the biggest monthly increase since December 2021, when the recent series of Bank of England Bank Rate increases began.

Figures compiled for Forbes Advisor by online mortgage broker Better.co.uk show that, while fixed rates have steadily fallen over the past three months, they are up to 3.22 percentage points higher than this time last year.

For example, the average two-year fixed rate is now 5.12%, according to Better – this compares to an average of 5.65% in October last year (the highest average in 2022). But average two-year fixed rates were at 1.9% this time last year.

That said, mortgage brokers say there is evidence of stabilisation in the market with continued rate cuts, which should give borrowers greater confidence.

Sam Amidi, Better’s head of mortgages, said:“Given the economic downturn from October, we have naturally seen approvals drop as the consumer considers their next move.

“Historically the Christmas period has been a reflection period for reviewing finances and we have seen a strong response at the start of 2023 with consumer confidence coming back and lenders reducing rates.

“Despite the fact we expect the Base Rate to increase on 2 February, lenders are optimistic this will have little impact on the current rates available and, if anything, there will be further competition in the market with lenders competing on pricing.

“This alone should give the consumer more confidence that we’re moving into a period of stability.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “At first sight the numbers are gloomy. This is at least partly down to the average rate on new mortgages continuing to rise significantly. As borrowers will be all too aware, this comes on the back of significant increases in the average rate paid over the previous three months.

“Thankfully, the situation has significantly eased for borrowers. Lenders continue to chip away at fixed-rate mortgage pricing with Virgin Money reducing its five-year fixed rate to 4.17%, it won’t be long before the psychological 4% barrier is breached, making fixes considerably more attractive than they were just a few weeks ago.”

26 January: Fixed Rates Fall At Buy-To-Let Specialist

The Mortgage Works, the buy-to-let lender owned by Nationwide building society, is the latest lender to cut rates across its fixed mortgage range by up to 0.5 percentage points, writes Jo Thornhill.

Its two-year fixed rate loan is now 3.99% (at 65% LTV). The equivalent five-year deal is 4.39%. At 75% LTV two year fixed rates start from 4.29% and five-year rates are from 4.79%. These deals are for purchase or remortgage and all carry a 3% arrangement fee.

Fixed rates for landlords with large portfolios see the biggest (0.5 percentage points) cuts. The fee-free two-year fixed rate (75% LTV) falls from 6.09% to 5.59%.

In contrast, TMW’s tracker mortgage rates have been increased by up to 0.2 percentage points. The no-fee two-year tracker deal is 4.99% (65% LTV).

TMW follows a slew of lenders who have trimmed their fixed rate mortgages down in recent weeks as competition for new business has increased.

Daniel Clinton at The Mortgage Works said: “These latest rate reductions, which are being rolled out across a significant number of products, will see our headline two-year fixed product fall below four per cent and shows that we are doing what we can to support landlords to manage their finances.”

See related stories below

25 January: More Big Names Cut Rates

TSB and Accord, the mortgage brand owned by Yorkshire Building Society, have both cut rates across their mortgage ranges following the market trend for rate cuts in recent weeks, writes Jo Thornhill.

Accord has tweaked rates down by 0.17 percentage points on its buy-to-let range. The new rates will be available from 27 January. It is offering a five-year fixed rate at 4.97% at 60% LTV for house purchases, although there is a steep £1,995 fee. The deal pays £500 cashback. There is a two-year fix at 4.9% (60% LTV) with the same fee. At 75% LTV rates start at 5.35% for a two-year fix (£1,495 fee and £500 cashback) for remortgage customers or 5.39% over five years with no fee.

TSB will cut rates by up to 1.8 percentage points on its residential mortgage range from 27 January. It will also cut rates by up to 1.55 percentage points on its shared equity and shared ownership fixed rate mortgage range, and by up to 0.8 percentage points on its buy to let fixed rates. The three-year fixed rates (which have been cut by 1.8 percentage points) will start from 4.64% at 60% LTV with a £995 fee. The five-year fixed rates start from 4.39% (cut by 0.4 percentage points) at 60% LTV with a £995 fee.

23 January: Halifax Joins List Of Lenders Refreshing Loan Offers

More lenders have trimmed mortgage rates as competition for business remains strong, writes Jo Thornhill.

Our round-up of the latest mortgage rate changes includes:

Halifax rates have been cut by up to 0.2 percentage points and the lender has added three-year fixed rates to its range. Three-year fixed rates start from 4.68% with no fee (60% LTV) or from 4.5% with a £999 fee. The five-year fixed rates start at 4.46% with no fee (60%LTV) or from 4.86% at 90% LTV. There is also a 10-year fixed rate. Rates start from 4.15% for borrowers with 40% deposit or equity in their home.
Virgin Money lender has slashed rates across its mortgage range by up to 0.59%. Its broker-exclusive deals see some of the biggest cuts with a two-year fixed remortgage deal now priced at 4.6% (65% LTV). Five-year fixed rates start from 4.28% (65% LTV) or 4.7% at 95% LTV, both with a £1,495 fee.
Landbay, the specialist buy-to-let lender, has cut rates by up to 0.3 percentage points on its five-year fixed rate deals. Rates start from 4.29% at 55% LTV. Landbay charges a percentage-based product fee ranging from 2% to 7%. It is also offering a five-year fixed rate for borrowers at 75% LTV from 5.39% with a 2% fee, or at 4.79% with a 5% fee.

19 January: Fixed Deals Proliferate Around 5% Mark

Mortgage rates continue to nudge down, in welcome news for borrowers, writes Jo Thornhill. Here’s our latest round-up of the changes:

Nationwide building society has cut mortgage rates (fixed and tracker) for the second time this month, this time by up to 0.2 percentage points, effective from Friday 20 January. It follows a cut of up to 0.6 percentage points across its range on January 6. First time buyers can now get a five-year fixed rate at 4.69% with no fee, at 85% loan to value (this rate has been cut by 0.15%). Remortgage customers can get a two-year tracker deal at 3.84% with a £999 fee at 60% LTV (reduced by 0.2%).
Skipton building society has cut its two-year and five-year fixed-rate deals by up to 0.42 percentage points. It is now offering a five-year fixed-rate deal at 95% LTV at 5.03% with a £495 fee, available for purchase only, and a two-year fixed rate deal at 60% LTV at 4.75% with a £995 fee and £250 cashback, for purchase and remortgage. The lender has also reintroduced its 85% loan-to-value (LTV) ratio range after withdrawing it last September.
NatWest has tweaked its rates down by up to 0.1 percentage points on its remortgage range and by up to 0.06 percentage points for existing customers. It follows cuts of up to 0.72 percentage points earlier this month. It has a two-year fixed rate at 5.08% for remortgage customers at 60% LTV. The equivalent five-year fixed rates start from 4.28%.
MPowered Mortgages, available through brokers, has cut its fixed rate range by up to 0.27 percentage points. Its five-year fixed rate is 4.41% for borrowers at 60% LTV. It has a three-year fixed rate at 4.54% at 60% LTV – both deals have a £999 fee.
Keystone Property Finance, the specialist buy-to-let lender, has reduced its standard and holiday home fixed-rate mortgage deals by up to 0.2 percentage points. It offers a five-year fixed rate at 5.64% with a 4% arrangement fee or 5.89% with a lower 3% fee. Both products are at 65% LTV.

You can read more about available mortgage rates here.

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January 17: Trend Reflects Optimism On Bank Rate Increases

Lenders are continuing to take a knife to their fixed rate mortgage deals as competition returns to the market, writes Jo Thornhill.

A roundup of the latest lenders to reduce rates includes:

HSBC: Residential mortgage rates cut by up to 0.15 percentage points and buy-to-let deals cut by up to 0.1 percentage points. Among its new offerings is a 90% loan to value five-year fixed rate with no fee and £500 cashback for first-time buyers at 4.94% (a cut of 0.1 percentage points).
Santander: Reduced fixed rate mortgage deals across the board by up to 0.59 percentage points and tracker deals by up to 0.5 percentage points. It is offering a two-year fix at 4.84% (this has been cut by 0.45 percentage points) for purchase borrowers at 60% LTV, with a £999 fee. The fee-free option (also cut by 0.45 percentage points) is now 5.14%. There is a five-year fix at 90% LTV with no fee at 5.09% (this has been cut by 0.45 percentage points). The same deal with a £999 fee has been lowered by 0.3 percentage points to 4.94%. At 95% LTV, the five-year fix with no fee has been cut by 0.2 percentage points to 5.84%.
Fleet Mortgages: Broker-only buy-to-let lender Fleet has cut its fixed rates by up to 0.2 percentage points. Five-year fixed rates now start at 5.29% for 65% loan-to-value (LTV) and 5.39% for 75% LTV. A seven-year fixed rate is available at 5.43%.
Bluestone Mortgages: Rates reduced by up to 0.5 percentage points on all fixed rate residential and buy-to-let mortgages. Rates now start from 7.10% fixed on lending up to 85% LTV.
Atom Bank, is increasing the offer validity period for its remortgage and purchase products to six months. It has also introduced new rates for its two, three and five-year purchase and remortgage products, with reductions of up to 0.35 percentage points across its entire range. For a 60% LTV, the app-based bank is offering a five-year remortgage fix at 4.34% to 31 May 2026 (£900 fee applies). For purchase home loans and LTVs up to 80%, there is also a no-fee, five-year fix at 4.54% to the same date.

Sam Amidi, head of mortgages at our broker partner Better.co.uk, said: “With [wholesale market] swap rates dropping in recent weeks, we’ve seen more lender confidence in reducing rates.

“Despite the imminent announcement on the Bank rate by the Bank of England in February – with rates expected to increase again – lenders’ confidence in reducing rates is a good indication of where the market is heading. While we don’t expect any significant rate drops, small reductions can make a difference for the consumer.”

13 January: Higher Payments And Deposits Making Ownership More Difficult

Monthly mortgage payments are taking a larger bite out of typical first-time buyer household outgoings, writes Laura Howard.

Monthly mortgage payments now account for 39% of a typical first-time buyer’s take-home pay, compared to the longer-term average of around 30%, according to Nationwide’s Affordability Report, published today.

The findings are based on first-time buyer households with outstanding mortgages at 80% of the property value.

Against a backdrop of nine interest rate rises during 2022, mortgage costs surged after the ill-starred mini-Budget in late September, reaching their highest levels since 2010.

But, while financial conditions have largely since stabilised, mortgage rates have not recovered to levels seen before the mini-Budget, according to Nationwide.

Andrew Harvey, the lender’s senior economist, said: “The biggest change in terms of housing affordability for potential buyers over the past year has been the rise in the cost of servicing the typical mortgage as a result of the increase in mortgage rates.

“This measure is now well above the long run average, at 39% of take-home (net) pay, and close to the levels seen in the run up to the financial crisis.”

Mortgage rates peaked at around 6.5% last October, but have been steadily falling since. According to data from online mortgage broker Better.co.uk, the average cost of a two-year fix now stands at 5.10%, or 4.72% for a five-year fix.

However, rates are higher for small-deposit mortgages most common among first-time buyers.

While house prices have fallen in recent months, raising a deposit also remains a significant barrier to buying a first home, according to Nationwide.

A 20% deposit on a typical first-rung property is now equivalent to 112% of the full-time worker’s pre-tax income – a similar level to a year ago, and only just shy of the all-time high of 117% recorded earlier in 2022.

A separate report from estate agent Hamptons, using the latest government census data, revealed that the number of private renters grew by 1.12m over the last decade – led by the 10% most deprived areas of England and Wales.

Hamptons found that around 23% of households in the poorest 10% of the two nations rent their homes privately – up from 18% a decade ago.

Aneisha Beveridge, Hampton’s head of research, said: “Growth in the private rented sector over the last decade has come on the back of fewer younger people buying their own home, particularly in the less affluent areas.”

12 January: FCA Fears 750,000 Defaults

More than 750,000 households are at risk of defaulting on their mortgages in the next two years, according to the Financial Conduct Authority (FCA), writes Jo Thornhill.

In a letter to the cross-party Treasury Select Committee, Nikhil Rathi, the regulator’s chief executive, said 200,000 households had already fallen behind with their home loan repayments by June 2022.

FCA data and estimates predict a further 570,000 are at risk of ‘mortgage payment shortfall’ over the next two years. This is when more than 30% of a borrower’s gross household income is going towards mortgage payments.

The figures throw the spotlight on the rising cost of living crisis as millions of households face the double whammy of rising interest rates and inflation at levels not seen for 40 years.

It comes just days after the Office for National Statistics reported that 1.4 million households will face higher mortgage payments this year as their fixed rate deals come to an end and they remortgage to a more expensive loan.

In his letter to MPs, Mr Rathi said: “This number [of at-risk borrowers] is sensitive to changes in interest rates, and factored in market interest rate expectations as of 23 September, as well as external forecasts of changes in real incomes between 2020 and 2022.

“Specifically we assumed that all households would experience a 10% fall in their real incomes over this period.

“This does not necessarily mean that those at risk will miss a mortgage payment because some people will be able to reduce their spending or make use of savings to help them meet their mortgage commitments.”

Mr Rathi adds that any borrower who is facing financial difficulty should contact their lender to look at ways to reduce or smooth the increases to their mortgage payments.

He said the FCA is continuing to work with lenders and has published guidance to firms about forbearance and how to help customers who are struggling.

11 January: Lenders Trim Interest Charges To Tempt Borrowers

New mortgage deals have the shortest shelf life ever at just 15 days on average before being withdrawn, according to analysts Moneyfacts. This is the joint lowest amount of time on record, level with October 2022, writes Jo Thornhill.

In comparison, this time last year mortgage deals were available for 28 days on average.

But while this points to increased volatility in the mortgage market, which could cause difficulties for borrowers looking to secure a new deal, fixed mortgage rates are falling.

Our mortgage partner, better.co.uk, reports the average two- and five-year fixed rates have tracked steadily downwards in recent weeks, down to 5.12% and 4.72% respectively, following 13 consecutive months of rises up to November 2022.

Product choice is also showing signs of improvement, following a significant drop in available deals at the end of last year.

There are currently more than 3,600 mortgage deals available, according to Moneyfacts – this compares to the 2.258 on the market in October 2022. But this is still down on the 5,394 deals available in January last year.

Rachel Springall at Moneyfacts said: “As existing mortgage holders weigh up their refinancing plans and others debate their home purchase desires in 2023, the cost of living crisis and inflated interest rates over recent months may well impact borrowers’ intentions of getting a new deal.

“However, it is anticipated that fixed interest rates will fall further in the months to come to entice new business.”

9 January: ONS Says Million-Plus Households Face Dearer Payments

Nearly one-and-a-half million UK households with fixed-rate mortgages face substantially increased borrowing costs when they renew their home loan arrangements this year, according to the UK’s official data provider, Andrew Michael writes.

The Office for National Statistics (ONS) says that 1.4 million mortgage customers, who bought properties with fixed-rate home loans when interest rates were set below 2%, are due to renew their arrangements in 2023.

Mortgage interest rates have jumped appreciably over the past year in light of an extended series of rises in the Bank rate imposed by the Bank of England (BoE) to head off soaring levels of inflation.

The rate, which currently stands at 3.5% – having risen nine times and by 3.4 percentage points since December 2021 – is an important measure that affects both the cost of borrowing, as well as the amount of interest that banks and building societies pay to savers.

Despite the run of Bank rate rises, most borrowers with fixed-rate mortgages have, until now, been insulated from their effects because they have remained within the offer periods for their home loans.

Based on BoE data, however, the ONS estimates that around 353,000 fixed-rate mortgages are due to be renewed between January and March this year. It adds that the number of fixed-rate mortgage deals due to expire during the course of 2023 will then peak at around 371,000 between April and June 2023.

According to Moneyfacts, the average two-year fixed-rate deal stood at 2.38% a year ago, but has increased markedly over the intervening period to 5.79% today.

Sarah Coles, senior personal finance analyst, at Hargreaves Lansdown said: “1.4 million mortgage borrowers are in a fixed-rate deal that’ll set them back an extra £250 a month by the end of the year. They’re coming to the end of fixed-rate deals, most of which feature interest rates under 2%, and face fixing at as much as 6% going forward.”

“It means either paying more for years, or reverting to a sky-high standard variable rate, while they wait for rates to fall.”

Gary Smith, financial planning director at wealth manager Evelyn Partners, said: “Households must be prepared for increased outgoings this year. Remortgaging to substantially higher rates will, for many, be a significant part of that.”

“Those who have deals expiring this year face a difficult choice as to whether to fix again, or risk a variable rate deal. The former could mean locking in at a relatively high interest rate in order to achieve certainty. The latter could mean rising payments in the short-term, but possibly lower payments in the medium-term as benchmark interest rates plateau or even start to come down.”

For those looking for some certainty over repayments, a two-year fix might make more sense. This is because if rates fell in the next year or two, home loan customers could then step on to a better deal.

An added financial danger, however, is that those who are already paying a substantial proportion of their net income in mortgage costs will be stretched by the increased payments on their new deal. In turn, they could be forced into reducing any savings provision they are already making whether in the form of cash deposits, individual savings account, or pension.

“One tactic some will turn to is to negotiate a longer-term mortgage in excess of 25 year, and for many that could take repayments into retirement age for one or both of the borrowers,” Evelyn’s Gary Smith said.

“This can be a reasonable move either if there is a plan to overpay in future years before retirement, or if the borrowers are comfortable that they can continue to repay a mortgage after retiring without significantly impacting their living standard. For some, it could mean putting off retirement to a later date.”

6 January: Respite For Borrowers As Providers Start To Cut Fixed Rates

Competition in the home loan market has started to intensify, as news emerges that several high street lenders are cutting interest rates on their fixed mortgage deals, Jo Thornhill writes.

Nationwide Building Society, TSB and Virgin Money have all announced plans to cut mortgage rates in what will be welcome news for borrowers.

Mortgage brokers say they also expect more lenders to follow suit as stronger competition returns to the mortgage market. The news comes despite big increases to the Bank of England’s base rate during 2022.

The influential bank rate, which affects both borrowers and savers, currently stands at 3.5% having risen nine times since December 2021.

Nationwide has cut its fixed mortgage rates by up to 0.6 percentage points for first-time buyers, home movers and remortgage customers.

Rival high street lender TSB is cutting fixed rates for purchase and remortgage by up to 1.3 percentage points from Monday (9 January).

Elsewhere, Virgin Money has also reduced its fixed rates by up to 0.93 percentage points. The lender has also launched a range of new residential and buy-to-let mortgage deals.

Nationwide, one of the biggest UK lenders, is offering a five-year fixed rate of 4.43% aimed at remortgage borrowers with at least 60% equity in their property. A three-year fix, for borrowers with 20% equity in their home, is priced at 4.99%.

First-time buyers with a 15% cash deposit can secure a two-year fixed rate with Nationwide at 5.09%, or 4.84% over five years.

Sam Amidi, head of mortgages at broker Better, said: “We saw less movement on mortgage rates at the end of 2022 as most lenders had hit their mortgage quota for the year. These latest moves from Nationwide, TSB and Virgin show competition in the market is returning and we expect more lenders will cut rates in the coming weeks.”

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4 January: Cocktail Of Factors See Numbers At Lowest Since Pandemic

The number of mortgages approved for house purchases fell to 46,100 in November from 57,900 in October.

It marks the lowest level recorded since June 2020 (40,500) when the property market ground to a halt during the Covid pandemic.

Approvals for remortgaging – as defined by switching to a different lender – plummeted to 32,500 in November from 51,300 in October. This is below the previous six-month average of 48,100.

The figures, from the Bank of England’s latest Money and Credit Report, are evidence of a weakening property market due to rising borrowing costs, falling property prices and the negative after-effects of last September’s mini-Budget under then-Chancellor, Kwasi Kwarteng.

Alice Haine, personal finance analyst at investment platform, Bestinvest, commented: “November’s drop in mortgage approvals and remortgaging is no surprise when you consider the catalogue of challenges facing the property market, with higher borrowing costs, double-digit inflation and falling real wages impacting affordability for both first-time buyers and those looking to refinance.”

The figures also reflect many buyers failing affordability checks or struggling to secure a mortgage at all after a spate of major lenders pulled deals following the mini-Budget, she added.

However, while mortgage approvals fell in November, individual mortgage debt increased to £4.4 billion from £3.6 billion in October, according to the Bank of England.

On the back of nine interest rate rises in 2022, the cost of mortgages also increased. Interest paid on new borrowing rose by 26 basis points to 3.35%, while rates on existing mortgages increased by 9 basis points to 2.38%.

But, while the odds have been against them, mortgaged first-time buyers are still set to make up 53% of the property market in 2022, according to separate research from Yorkshire Building Society – the UK’s eighth largest mortgage lender.

At 370,000, the forecast number of first-time buyers for 2022 will represent the second highest annual total for 14 years.

Nitesh Patel, Yorkshire Building Society’s strategic economist who forecasted the figures, said: “Demand from first-time buyers remains strong, even with house prices being at historic highs for much of the year and the country experiencing such political and economic uncertainty.”

20 December: Support Aimed At First-Time Buyers With 5% Deposit

The government has announced that its Mortgage Guarantee Scheme (MGS) will be extended by a year, until the end of 2023.

Launched in April 2021, the scheme enables first-time buyers to buy a home with a 5% deposit.

With average property values in the UK well above £260,000, many first-time buyers – who make up 85% of all housebuyers – struggle to raise the funds for deposits. The higher the deposit put forward, the more favourable the terms of the mortgage tend to be.

MGS has thus far helped over 24,000 households get onto the property ladder, according to government data.

Under the scheme the government offers mortgage lenders financial guarantees so they can provide mortgages that cover 95% of the purchase price, subject to the usual affordability checks, on a house worth up to £600,000.

John Glen MP, Chief Secretary to the Treasury, said: “Extending this scheme means thousands more families have the chance to benefit, and it supports the market as we navigate through these difficult times.

“To also help people to get onto the property ladder, the government has increased the level where first-time buyers start paying stamp duty from £300,000 to £425,000. Furthermore, first-time buyers can get relief on properties costing up to £625,000, as opposed to £500,000 previously. Both of these measures are time-limited to April 2025.”

Government schemes intended to support home ownership:

Help to Buy Individual Savings Accounts (Help to Buy ISA): Aimed at first-time buyers, provides a tax-free bonus of up to £3,000.
Lifetime ISA (LISA): A long-term savings product to support people saving for a first home or to fund later life.
Shared Ownership: Gives first-time buyers the option to buy a share of their home (between 25% and 75%) and pay rent on the remaining share.
First Homes: A scheme designed to help local first-time buyers and keyworkers onto the property ladder, by offering homes at a discount of 30% compared to the market price.

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8 December: Options Include Reducing Rates Or Extending Term

Mortgage customers concerned about affording their repayments should receive guidance and support from their lender to help them weather the cost of living crisis, according to the Financial Conduct Authority.

The regulator wants banks and building societies to provide tailored support and measures including:

temporarily reducing the interest rate
extending the term of the mortgage to lower monthly payments
switching the loan to an interest-only arrangement, either permanently or for a limited period, again to lower monthly payments.

Each of these tactics comes at a cost. For example, any deferment of interest owed will lead to higher repayments at a future date, while extending the term will increase the total amount paid over the life of the mortgage.

Also, extending the term beyond retirement age may not be possible if the lender calculates that you would not be able to afford repayments at that point.

Interest-only deals (as opposed to standard capital and interest mortgages) work by deferring repayment of the capital debt until the end of the loan period, so they are only available to those who have a credible way of repaying the total amount at the end of the mortgage.

Anyone switching to interest-only terms temporarily would face higher repayments when the short-term arrangement came to an end.

Making changes to your mortgage may also affect your credit file, with prospective lenders in the future being able to see that you took action because of fears of meeting your repayments.

The regulator says anyone worried about being able to afford their mortgage payments should contact their lender as soon as possible. Its rules mean lenders are required to treat customers fairly and give them support tailored to their circumstances.

Sheldon Mills, head of consumers and competition at the FCA, said: “Most borrowers are able to keep up with their mortgage payments and should continue to do so. But if you’re struggling to pay your mortgage, or are worried you might, you don’t need to struggle alone. Your lender has a range of tools available to help, so you should contact them as soon as possible.”

Lenders have until 21 December to respond to the regulator’s latest guidance, which was issued after the government hosted a roundtable discussion on Wednesday with the FCA, lenders and consumer representatives to discuss the impact of the cost of living crisis on the mortgage market.

At the meeting, lenders committed to enabling customers who are up to date with payments to switch to a new competitive mortgage without another affordability test (an assessment of their ability to make repayments).

More information will also be provided to help customers plan ahead when their fixed-rate mortgage deal comes to an end.

The government also confirmed that it will make the Support for Mortgage Interest benefit easier to access. This enables those on Universal Credit to apply for help with mortgage interest payments.

4 November: Bank Rate Expected To Peak At 4.75% This Time In 2023

The Bank of England yesterday increased its Bank rate by 0.75 percentage points to 3% in a bid to stave off steepling levels of inflation, writes Andrew Michael.

It is now at its highest level since 2008. But where will it go next? And what are the implications for borrowers?

The Bank rate is important because it is used by banks, building societies and other financial institutions to determine both lending costs and the returns paid on savings.

Explaining its decision, the Bank pointed to a “very challenging outlook for the UK economy”. It added that it expected “the UK to be in recession for a prolonged period” and warned that consumer price inflation “would remain elevated at levels over 10% in the near term”.

Financial markets reacted to the news by estimating that official interest rates would top out at about 4.75% by next autumn. Many mortgage rates will then be set at a premium to this level.

The Bank’s decision on Thursday will drive up costs straight away for around 2.2 million UK mortgage customers that have taken out variable rate or tracker mortgages. The latter mirror movements in the Bank rate so borrowers will experience an immediate knock-on in terms of their monthly repayments.

However, in comments made after the initial rate-setting announcement, Andrew Bailey, the Bank’s governor, suggested markets had over-exaggerated their predictions for future rate rises. He added that lenders would need to reflect this in their mortgage pricing.

He said: “[The Bank rate] will have to go up by less than currently priced into financial markets. That is important because, for instance, it means that the rates on new fixed-term mortgages should not need to rise as they have done.”

In the period of relative stability since Jeremy Hunt, Chancellor of the Exchequer, reversed most of the decisions made by his predecessor, Kwasi Kwarteng, in his September mini-budget, fixed-rate mortgages have already started to edge down in price.

Following yesterday’s move, Simon Gammon, managing partner at Knight Frank Finance, said he thought that fixed-rate products are likely to remain stable, or perhaps even fall further: “Many fixed-rate products sit somewhere between 5.5% and 6%. Swap rates, instruments used by lenders to price mortgages, have been easing.

“If they continue to do so, we believe that many borrowers could still enjoy fixed-rate products starting with a four.”

Market confidence

Paul Holland, a mortgage broker at Henchurch Lane Financial Services, said: “Fixed rates have already factored in the latest increase so they shouldn’t move any further north. They tend to be based on swap rates, which if anything, are now coming down as some confidence is restored to the market following the U-turn on everything done by Kwasi Kwarteng and Liz Truss.”

Paul Elliott, managing director at broker Propp, said: “The key from a borrower’s perspective is how the swap rate markets react to this increase and the Autumn budget [on 17 November] given that fixed-rate mortgages are still the most popular option for most people.

“But even if fixed-rates drop from the peaks seen in October, we’re still entering a prolonged period of higher rates than most borrowers have been used to for the past 15 years. This will undoubtedly put pressure on affordability and exacerbate the current cost of living crisis for many. Difficult times lie ahead.”

Jon Halbert, mortgage and protection adviser at Key Financial Associates, said: “The latest rate rise potentially kills the [house] purchase market stone dead and is catastrophic for anyone coming out of a fixed rate.

“Anyone who fixed their mortgage last year for longer than 2 years, at less than 2% for some and less than 3% for others, may not need to change their spending habits for now. But for those families whose fixed-rates end in the next few months, this could mean mortgage defaults and even repossession.

“Anyone who has a mortgage with a fixed rate ending within the next six months who is worried about this and the effect it will have on them should speak to a mortgage broker as soon as possible. It has never been more important to be proactive.”

Henchurch Lane’s Paul Holland adds: “Bank rate predictions for the next year are tending to fall somewhere in the 4% to 5% bracket. This is expected to be relatively short-term with a target Bank rate of close to 2.5% over the longer term.

“This means that anyone looking at any kind of new mortgage rate for the next year or so, whether that be on a purchase or a renewal basis, is likely to be paying a fair amount higher than what they’ve been used to for a while now.

“Some conversations we’re having with clients include options around tracker rates, as well as longer mortgage terms and interest-only products, if viable, all of which should go some way to helping reduce the impact in the short term increase.

“Budgeting and planning should be at the forefront of any advice process. It’s time for people to start looking at their situations earlier than normal to ensure they’re not stuck later on.”

27 October: 40% Could Struggle With Mortgage Costs

Higher interest rates could leave up to 40% of homeowners struggling to pay their mortgages next year, according to analysts.

Investment firm Morgan Stanley shared analysis showing that between 35% and 40% of UK mortgages will reach the end of their initial terms over the next 12 months, leaving mortgage holders to negotiate new deals at much higher rates.

The firm predicts mortgage rates of around 6% would overstretch up to 4 in 10 UK households, as rates rise alongside escalating energy bills. Its research found 30% of households with the lowest income make up 5% of the mortgage books.

In the same analysis, as reported by the Financial Times, Morgan Stanley said mortgage affordability could be worse in the next year than it was prior to the global financial crisis.

It noted, however, that the quality of mortgage underwriting is higher now than it was pre-crisis, meaning current borrowers’ applications were more carefully vetted than they were before 2008.

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As mortgage holders anticipate painful remortgage rates, experts are advising anyone who can make overpayments to do so now, as it could qualify them for a lower-rate LTV band on their next deal and reduce interest payments in the long term.

Most mortgage lenders allow borrowers to pay up to 10% of the outstanding loan every year penalty-free.

28 September: Fears Over Higher Rates And Fate Of Sterling Hit Loan Availability

Mortgage lenders are pulling deals due to the volatility of sterling on international currency markets and the prospect of interest rate rises to 6% by next year.

Santnder, Halifax, Virgin Money, Halifax and Skipton Building Society are among the major lenders that have closed mortgage offers to new customers in the last couple of days. However, existing mortgage applications will be processed as normal.

Smaller lenders are also retreating from the market, with Nottingham for Intermediaries withdrawing 14 deals from its shelves and repricing a range of residential and buy-to-let mortgages.

Scottish and Darlington building societies are also reported to be pulling their fixed rate products.

Jamie Lennox, director at broker Dimora Mortgages, said: “The future is certainly looking bleak when Halifax, the largest lender in the UK, pulls a big selection of products on offer.

“The UK economy is on red alert and lenders and borrowers alike are having to keep a keen eye on what is a rapidly changing rate environment.”

Lenders are reacting to uncertain future pricing conditions. The sudden fall in the pound on Monday led to fears of further inflation, and the prospect of the Bank of England responding with more rate hikes.

Last week the Bank’s rate-setting Monetary Policy Committee (MPC) raised interest rates for the seventh consecutive time to 2.25%.

While the Bank swerved a swift emergency rate rise this week, it said it will monitor the volatile performance of sterling and it “will not hesitate” to raise the Bank rate to control inflation when it next meets on 3 November.

Financial turmoil follows the raft of tax cuts announced by the Government in its mini-Budget on Friday, which triggered market uncertainty around the UK’s level of borrowing.

However, in a bid to ‘restore orderly market conditions’, the government has today announced it is carrying out temporary purchases of UK government bonds by auction between today (28 September) until 14 October.

Outlook for borrowers

Fixed rate mortgages – the most popular type of deal among borrowers – are priced according to ‘swap’ rates, which reflect expected interest rate movements, rather than what interest rates are today.

The cost of the cheapest two- and five-year fixed rate mortgages is now more than three times higher than a year ago, so borrowers coming to an end of their deal now, or looking to buy, will face higher costs and have fewer mortgages to choose from.

Mortgage lenders allow you to book in your next mortgage rates up to six months in advance, so if your deal is nearing expiry, it could pay to contact a fee-free broker ahead of time.

Rising property prices could mean that, if you’re remortgaging on your existing property, your loan-to-value bracket is lower, at least unlocking the cheapest of the higher-priced deals available.

Read more on How To Ride Out The Mortgage Storm and work out potential monthly repayments against varying interest rates with our Mortgage Calulator.

22 September: Bank Rate Hiked From 1.75% To 2.25%

Mortgage borrowers – and those attempting to get onto the housing ladder – were handed a further blow today as the Bank of England announced a seventh consecutive rise in interest rates.

The 0.5 percentage point hike from 1.75% to 2.25%, agreed by the Bank’s rate-setting Monetary Policy Committee (MPC), will affect around 2.2 million households on variable rate mortgage deals.

The hike will add around £99 a month onto the cost of a £400,000 mortgage, £62 a month onto the cost of a £250,000 mortgage, or £37 a month onto the cost of a £150,000 mortgage.

Borrowers on tracker rates – which mirror movements in the Bank rate by a set margin – will see an immediate impact in payments, while those paying standard variable rates (SVRs) will see the rise at their lender’s discretion.

However, pressure is mounting on lenders to refrain from passing on the full impact of the latest rise, as households continue to struggle with rising living costs. Even before today’s hike, average SVR costs stood at 5.4% according to Moneycomms.co.uk.

Those looking to buy for the first time will have an even steeper road to climb in terms of showing sufficient affordability against lenders’ more expensive mortgage rates.

James Turford, at Even, a mortgage broker for first-time buyers, said: “There’s never been a harder climate for first-time buyers in the UK. The combination of sky-high property prices and rapidly rising essential living costs have made it nearly impossible for many wanting to take their first step onto the property ladder.”

Mortgage deals of up to 95% of the property value are available, while first-time buyers in England and Northern Ireland are exempt from paying stamp duty on the first £300,000. Government schemes such as Help to Buy are available to help bridge affordability shortfalls, but only on new-build homes.

Until the rate of inflation cools from its current rate of 9.9% – the government target is just 2% – further interest rate rises are widely expected. However, the Bank of England has revised its peak inflation forecast down from 13% by the end of the year to 11% in October.

While there is nothing you can do about rising interest rates, it is possible to book a mortgage rate for your current home up to six months in advance – even if you are currently tied into a fixed rate deal.

Use our live mortgage tables to find out what kind of mortgage rates are available for your needs and circumstances.

1 August: Scrapping of lender ‘stress test’ relaxes mortgage affordability

Rules for would-be mortgage borrowers have been relaxed from today, as lenders no longer need to apply additional affordability tests.

Under Bank of England rules, banks and building societies had been forced to calculate whether prospective borrowers could afford their mortgage payments if the interest rate they were being offered was to rise by 3 percentage points during the initial five years of the loan.

The rules were introduced by the Bank of England in 2014 and revised in 2017. However, interest rates only increased by a maximum of just 0.5 percentage points between 2017 and 2021, prompting concerns that the 3% ‘stress test’ uplift was too high.

Lenders will now base their calculations on forecasted interest rates, although this must include a minimum ‘stress buffer’ of at least 1 percentage point above a borrower’s original mortgage rate.

However, Paul Johnson, head of mortgages at St. James’s Place said, the scrapping of the stress test, “won’t have a big impact on lenders’ affordability calculations as they will need to factor in increases in utility bills.”

Energy bills are expected to soar as high as £3,500 a year in October for a dual-fuel typical-use household.

Currently pegged at 1.25%, some forecasters are suggesting that interest rates will rise to 1.75% when the Bank of England announces its next decision on Thursday.

8 July: First Direct Launches 10-Year Fixed Rate With Unlimited Overpayments

First direct has, today, launched a new 10-year fixed rate mortgage in response to growing demand for greater security around household finances.

Borrowers are permitted to make an unlimited number of overpayments during the fixed-rate term with no penalty. Usually, lenders limit overpayments on fixed rate deals to 10% of the outstanding loan each year.

Interest rates on the mortgage – which is capped at a maximum loan size of £550,000 – are priced between 3.34% and 3.69% depending on the size of your deposit.

As an example, borrowers with the minimum 20% deposit will pay 3.59% with a £490 product fee, or the slightly higher rate of 3.69% for the fee-free option.

The mortgage is available to first-time buyers, homemovers, remortgagers, and those looking for additional borrowing, while borrowing terms can extend to up to 40 years.

First Direct joins a number of other lenders to offer 10-year fixed rate mortgages including Halifax, TSB and Lloyds, as demand grows for long-term financial certainty.

The cost of living is soaring with annual inflation at 9.1% in the year to May, while the Bank of England’s Base rate has risen five times since December from 0.1% to its current 1.25%.

Chris Pitt, chief executive of First Direct, said: “The cost of living crisis in particular has forced homeowners and prospective buyers to rejig their monthly incomings and outgoings, of which mortgage payments tend to take up the lion’s share.

“After a string of base rate hikes in 2022, the launch of this product is to give homeowners and buyers long-term peace of mind while external volatility – such as soaring house prices and rising utility bills – shows no signs of abating.”

First direct also offers two-year and five-year fixed rate mortgages. In April this year, it also launched a 5% deposit mortgage.

24 June: First Mortgage Deals Launched Under Help To Build Equity Loan Scheme

Today sees the launch of a government-backed scheme designed to help buyers with small deposits onto the property ladder with homes tailored to their exact requirements.

Help to Build, which is available in England only, offers self or custom (building on an existing shell or structure) home-builders an equity loan of between 5% and 20% (up to 40% in London), so long as they can put down a deposit of at least 5%.

The remaining 95% must be funded with a self-build mortgage from a lender registered with the scheme, which is offered by Homes England.

Darlington Building Society is the first lender to launch a Help to Build mortgage, which it is offering in conjunction with BuildLoan. It has two deals available, both three-year discounted rates priced at either 5.39% or 5.99%.

This, and other mortgages under the scheme, are offered on an interest-only basis for the duration of the build – which must take no longer than three years – but will switch to a repayment deal when the work is complete.

Darlington says it will release funds in advance of each stage of the building work required.

According to Housing Minister Stuart Andrew, Help to Build will, “break down the barriers to homeownership, as well as create new jobs, support the construction industry and kickstart a self and custom-build revolution.”

However, borrowers cannot use the government’s equity loan towards the cost of the build itself as the funds are paid directly to the lender only once the home is completed. The purpose of the equity loan is therefore to reduce the amount that’s being borrowed on the mortgage.

Repayments on the equity loan, which begin at the same time as the mortgage repayments, work in the same way as the government’s Help to Buy equity loan scheme, which closes in March 2023.

This means that for the first five years, repayments are interest-free. In year six, interest is charged at 1.75%. Repayments then increase every April based on the cost of the Consumer Prices Index measure of inflation (as measured in the previous September) plus a further 2%. CPI currently stands at a 40-year high of 9.1%.

Borrowers can pay back the equity loan at any time after the build is finished but it must be repaid in full by the end of the mortgage term or when the home is sold, whichever happens sooner.

Because it’s an equity loan, the amount you owe grows relative to the property value. This means if house prices go up, you will pay back more than you initially borrowed.

The Help to Build equity loan is not exclusively for first-time buyers, but you must live in the newly-built home as your only property to be eligible. It is not available to upgrade a home you already live in. Finally, you will need outline planning permission for the land you want to build on before you can apply.

23 June: Cost-Of-Living Crisis Means Fifth Of Homeowners Struggling To Pay Mortgage

One fifth (20%) of UK homeowners say they are unsure how they will afford their next mortgage payment, according to a recent survey by our online mortgage broker partner, Trussle.

The online survey gathered responses from 2,000 homeowners across the UK in May 2022. It also found that 38% of respondents were worried about their mortgage payments in the midst of the cost-of-living crisis.

Amanda Aumonier, head of mortgage operations at Trussle, says homeowners should consider remortgaging. According to Trussle research, this could save households up to £4,000 a year compared with a standard variable rate (SVR) mortgage.

Trussle says around 800,000 UK homeowners are currently on an SVR mortgage, and only 10% of homeowners have checked whether they are able to remortgage.

Ms Aumonier said: “Homeowners are facing a perfect storm of challenges that is pushing their finances to breaking point. This has left many feeling deeply worried as to how they can keep paying their monthly bills and make ends meet.

“However, we would urge people not to simply put their heads in the sand when it comes to their household finances. There is a range of measures from remortgaging to locking in a long term deal that can help give you greater stability and certainty.”

Although interest rates have risen, fixed mortgage rates remain competitive and the gap is closing between the cost of short and longer-term deals. Trussle has found a difference of just 0.45% between the average two-year and 10-year fixed mortgage interest rates as of June 2022.

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20 June: Would-Be Borrowers To Face Less Onerous Scrutiny

The Bank of England (BoE) is withdrawing its mortgage affordability test from 1 August.

The affordability test was introduced in 2014 and revised in 2017. It specifies a ‘stress interest rate’ to be used to calculate whether prospective borrowers would be able to meet their payments if their rate reached 3 percentage points higher than the original during the first five years of the mortgage.

However, actual interest rates increased by a maximum of only 0.5 percentage points from 2017 to 2021, prompting concerns that this 3% stress rate uplift was too high. Lenders will instead base their ‘stress test’ on forecast interest rates, although this must include a minimum ‘stress buffer’ of at least 1 percentage point above the original mortgage rate.

The move has been welcomed by Lawrence Bowles, director of research at estate agent Savills: “Removing the current stress testing could mitigate some of the impact of higher interest rates. In theory, at least, it should open up a little more capacity for house price growth.”

The removal of the test should make it less onerous for prospective borrowers to prove their ability to meet future mortgage repayments. However, rising house prices and interest rates are likely to continue to prove a hurdle for mortgage applicants.

The latest Rightmove price index showed a continued, albeit more modest, rise in property prices last month. According to Mr Bowles, the BoE’s announcement should provide “welcome relief to some would-be-buyers struggling to keep up with current criteria because of significant price growth of the past two years”.

Lenders will now be required to assess affordability by making reference to the market’s established ‘responsible lending’ rules, which include setting a maximum loan according to a multiple of the applicant’s income and analysing existing outgoings. Lenders will continue to be limited by the number of mortgages they are able to offer at loan-to-income ratios of 4.5 and above.

The announcement comes against a backdrop of rising interest rates, with the BoE increasing interest rates for the fifth consecutive time last week. Further interest rate hikes are predicted to tackle the soaring inflation rate in the UK, which will have a knock-on impact on both mortgage rates and the affordability of new mortgages.

Mr Bowles also added that “improved capacity for growth would also be dependent on how far lenders are prepared to push loan-to-income multiples under responsible lending rules”. However, he believes it is “unlikely to open up the mortgage-credit floodgates”.

16 June: Rate Rise To 1.25% Adds To Cost Of Living Woes

Our mortgages expert, Laura Howard, says today’s decision by the Bank of England to raise the UK Bank Rate to 1.25% will be unwelcome news for the nation’s homeowners and potential buyers.

“While it was widely expected, this latest rise is worrying news for the nation’s millions of mortgage holders who are already grappling – or even unable to meet – the relentless rising cost of essentials such as energy bills, fuel, and even grocery shopping.

“Anyone paying their mortgage lender’s standard variable rate (SVR), or who is on any mortgage deal that’s linked to the Bank Rate, will be forced to absorb an almost immediate impact of today’s hike into the cost of their monthly payments.

“As an example, the latest 0.25 percentage point rise will add around £26 onto the monthly cost of a £200,000 variable rate mortgage priced at 2.5%. But cumulative hikes since December 2021 – when Bank Rate stood at a much leaner 0.1% – will have added over £100 a month onto the same mortgage. That’s over £1,200 a year.

“First-time buyers and those looking to remortgage are likely to find that today’s hike, and those that have gone before it, have already been factored into the cost of new mortgages, while homeowners who are part-way through a fixed-rate mortgage will be sheltered from rate rises for now.

“But when their fixed deal ends they will be facing much higher mortgage costs.

“In light of this, it might be worth considering reserving your next mortgage deal on your current home, which you can typically do between three and six months in advance of it starting. This essentially means securing rates as they are today and taking advantage later in the year if they have since gone up.

“There is no obligation to take the deal so there’s nothing to lose if you change your mind.”

14 June: Supply Squeeze Doubles ‘Down-Valuation’ Mortgage Rejections

The number of mortgage applications rejected because a lender thought a property wasn’t worth the amount the applicant wanted to borrow has doubled since the Covid-19 pandemic.

‘Down valuations’, where there’s a mismatch between the agreed sale price of a property and the valuation carried out on behalf of a mortgage lender, can cause serious problems with mortgage applications.

For example, a borrower might agree a sale price of £350,000 with a property owner, only to find their mortgage lender values the property at just £300,000 and rejects their application.

With demand outstripping supply in the housing market, buyers are increasingly willing to pay over the odds for properties, leading to the increase in down valuations, according to an online mortgage broker Mojo Mortgages.

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‘Sellers are trying their luck’

Its research shows the rate of down valuations was at 12.8% in April, up from 10.4% a year earlier and double its mid-pandemic rate of 6.4% in December 2020.

Down valuations on remortgages was higher in April, at 15.4%.

Richard Hayes, co-founder and chief executive of Mojo Mortgages, said: “The property market has seen unprecedented demand over the last couple of years, with month after month of record price rises.

“This level of demand means that, in my opinion, some sellers are trying their luck and setting a selling price higher than estate agents recommend. With some properties, like three-bed homes, in such high demand, sellers are trying to see what they can achieve.

“With supply of new homes onto the market still well below demand, buyers are also willing to pay more for a property because of the lack of similar alternatives.”

Dealing with a down valuation

Buyers faced with down valuations may be able to renegotiate the sale price with sellers, especially if the sellers themselves are in the market for a new property and are relying on the sale to fund their next purchase.

Some lenders also allow appeals on down valuation decisions, but require strong evidence about the sale prices of other properties in the same area in order to change their decision.

Also, it may be that a valuation has been carried out remotely by someone at their desk. It may be worth asking for an in-person valuation to reevaluate anything you think they might have missed.

Each lender handles down valuations differently. It’s possible that a different lender, using a different surveyor, will return a valuation that’s closer to your agreed sale price.

Or if you’re able to increase your deposit, you could close the gap between the lender’s valuation and the sale price.

Alternatively, you could speak to your lender about a higher loan-to-value (LTV) ratio – that is, the amount you want to borrow in relation to the value of the property. Be aware, however, that higher LTVs typically mean higher rates of interest and more expensive monthly repayments.

Figures from Halifax earlier this week showed average house prices grew by 10.5% in the year to May, up to £289,099. Prices grew by 1% compared to April marking the 11th consecutive month of price rises, partially caused by the imbalance of supply and demand in the housing market.

April 27: First Direct Launches Debut 95% Mortgage

First Direct has launched its first ever 95% loan to value (LTV) mortgage for first-time buyers and people moving home.

Borrowers with a 5% deposit can choose from a two-year or five-year fixed rate, priced at 2.79% and 2.94% respectively. Both options are fee-free. The deal is available on loans of up to £550,000, meaning that buyers are able to borrow up to £522,500 if they have a deposit of £27,500.

It is not available to remortgagers.

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First-rung boost

In further bid to ease affordability constraints, First Direct’s 95% mortgage is available over a repayment term of up to 40 years. However, it also permits unlimited overpayments which can be made at any time, enabling borrowers to essentially reduce this term penalty-free.

Chris Pitt, chief executive of First Direct, said: “While the property market continues to speed along in the fast lane, first-time buyers have been left behind. While house prices continue to outpace deposits, we see this as a viable way of helping people onto the ladder.”

The mortgages also come with a six-month Agreement in Principle (AIP) compared to an industry average of two to three months.

Which other lenders offer 95% mortgages?

There are currently 56 mortgages available at 95% LTV, according to online mortgage broker Trussle. This is a considerable uplift from 2020, as the deals all but disappeared from the market during the pandemic over concerns around affordability.

In March 2021 the government launched a new Mortgage Guarantee Scheme to encourage lenders to start offering high LTV mortgages again.

Lenders that offer 95% LTV mortgages include Barclays, Santander, HSBC, NatWest, Skipton Building Society and Clydesdale Bank.

How do the First Direct deals compare?

First Direct’s offerings stack up well against other 95% deals which – due to the higher lending risk – come with higher rates than mortgages with lower LTVs.

Barclays has a two-year fixed rate mortgage priced at 2.67% with no fee – slightly cheaper than First Direct’s two-year deal of 2.79%. However, as part of the government’s Mortgage Guarantee Scheme, Barclays’ offering comes with associated restrictions, such as it cannot be used to buy new-build homes.

HSBC, First Direct’s parent bank, offers the choice of a two-year fixed rate of 2.69% with a £999 fee, or an equivalent 2.79% with no fee, while Newcastle Building Society charges 3.15% with no fee and £500 cashback.

Looking at five-year fixed rate 95% mortgages, Barclays offers the same rate as First Direct’s 2.94%, while HSBC’s offering is slightly higher at 2.99%. Both deals are also fee-free.

However, all deals with the exception of First Direct’s, limit penalty-free overpayments to 10% a year.

For up-to-date mortgage rates, input your criteria into our mortgage tables below.

Choosing a deal

It’s important to factor in all considerations when choosing a mortgage, including fees versus headline rate, tie-ins and early repayment charges.

Look also at the follow-on rate, which is what the deal will revert to at the end of the term. That said, many homeowners look to remortgage to another rate once their initial fixed rate period ends.

A fee-free independent mortgage broker such as our partner Trussle, will crunch the numbers on your behalf and advise on the best deals for your circumstances.

Amanda Aumonier, head of mortgage operations Trussle, said: “High loan-to-value mortgages can play a crucial role in ensuring the market remains accessible to all, by slashing the size of deposits needed to secure a home. We hope to see this trend continue so that everyone can aspire to own their own home.”

Mortgage News: Halifax Extends Help For First-Time Buyers, As Lenders Continue To Cut Rates

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29 August: TSB Among Latest Lenders To Peg Down Mortgage Costs

28 August: Virgin Money and MPowered Announce Further Reductions Despite September Bank Rate Cut ‘Looking Unlikely’

22 August: Small Deposit Mortgages Benefit From Reductions

August 21: Building Society Now Offering Cheapest Five-Year Fixed Rates For New And Existing Customers

20 August: HSBC Poised To Challenge Cheapest Five-Year Rates

19 August: NatWest Cuts Five-Year Fix To Match Nationwide’s Leader

14 August: Competition Between Lenders At Its ‘Most Intense For 30 Years’ Say Brokers

13 August: Rates On Longer-Term Fixes Edge Down To 3.83%

12 August: NatWest Unveils 3.89% Broker Deal With Hefty Fee

9 August: 5-Year Fix Requires 40% Deposit, £999 Fee

1 August: Yorkshire BS, Accord, and MPowered Mortgages Announce Cuts To Residential Fixed Rates

31 July: Bank Rate Decision Due Tomorrow, 1 August

30 July: Bank Of England Sees Rise In Market Confidence

25 July: Higher Rates ‘Push 320,000 Into Poverty’

24 July: Latest Reductions Follow In Wake Of Nationwide’s Sub-4% Fix

23 July: Nationwide Offers Market-Leading 5-Year Fix

22 July: Fixed Rates Fall But First-Timers Still Struggling – Skipton

18 July: Halifax, NatWest Latest Major Lenders To Cut Rates

16 July: Lenders Look Ahead To August Bank Rate Decision

15 July: Market Prepares For Bank Of England Announcement

11 July: Competition Intensifies Ahead Of Bank Rate Cut

8 July: Lenders Confident Of Bank Rate Cut In Coming Months

5 July: More Cuts Expected Ahead of Bank Rate Decision

4 July: Competition Intensifies For Borrower Business

3 July: Santander Joins Rate-Cutting Spree

1 July: NatWest’s Second Round Of Reductions In Less Than Fortnight

28 June: 400k Households To See 50% Increases

26 June: Number Of Interest-Only Loans On Way Down

24 June: Market Expects Bank Rate Cut On 1 August

20 June: Market Expects Bank Rate Reduction In August

14 June: Borrowers With Small Deposits Face Rising Costs

13 June: FCA Says 1.1m Mortgages Using Emergency Support

12 June: Market Divides Over Likelihood Of Bank Rate Reduction

11 June: Attention Switches To August Bank Of England Decision

6 June: Lenders Follow Wholesale Market Trends

4 June: Building Societies Pulling High LTV Deals

24 May: Society Unveils Fee-Free First-Time Buyer Deal

23 May: Attitudes Vary To News Of Inflation Dropping To 2.3%

22 May: More Lenders Expected To Follow Suit

21 May: Tumbling Inflation Seen As Key To Bank Rate Cut

16 May: Sentiment Nudges Towards Early Bank Rate Cut

14 May: Lender Tactics Vary In Run-Up To Bank Rate Cut

10 May: High LTV Borrowers Qualify For Reduced Rates

8 May: Lenders Vary Tactics In Uncertain Market

3 May: Rises Will Apply To New £5k Deposit First-Time Buyer Deal

30 April: Borrowers Favouring Flexibility Of Two-Year Deals

29 April: Market Adjusts To Negative Bank Rate Sentiment

26 April: Market Heads In ‘Higher For Longer’ Direction

24 April: Market Responds To Inflation Rate News

17 April: Market Adjusts As Rate Cut Date Remains Uncertain

9 April: Hopes For Sustained Competition Between Lenders

8 April: New Rates To Made Public Tomorrow

2 April: Bank Of England Records Increased Approvals

28 March: Market Looks Forward To June Cut In Bank Rate

27 March: First-Timer Loans Available With £5,000 Deposit

26 March: Market Continues To Respond To Bank Rate Hold

21 March: Bank Rate Hold May Prompt Lenders To Trim Charges

20 March: Bank Of England Rate Call Tomorrow

19 March: No Bank Rate Cut Expected On Thursday

13 March: Bank Of England Sees Rise In Arrears

11 March: Bank Rate Announcement Next Week

7 March: Existing Customer Product Transfers To Cost More

5 March: Markets Expect Bank Rate To Stay Higher For Longer

29 February: Borrowers Seemingly Undeterred By High Rates

28 February: Mutual To Raise Fixed Rate Costs From Tomorrow

27 February: Markets Toes ‘Higher-For-Longer’ Line

23 February: Virgin Money And Halifax First To Sign Up To ‘Rate Reducer’ Mortgage

22 February: Raft Of Major Lenders Adjust Mortgage Costs

20 February: Brokers Expect Further Rate Increases

12 February: Era Of Falling Rates Looks To Be Over

8 February: Market Adjusts To ‘Higher For Longer’ Scenario

7 February: Lowest 5-Year Purchase Rate Down To 3.94%

5 February: Market Accepts Rates Will Be ‘Higher for Longer’

1 February: Market Adjusts To Bank Rate Stasis