Mortgage rates slashed by Santander and Barclays, falling below the levels set during the 2022 mini-Budget for two-year fixes.
Rewritten Article:
Drops in Mortgage Rates Shake Up UK Housing Market
Get ready to dig your keys out of the jam, folks! Mortgage deals are seeing a drastic decrease across the board, with Barclays and Santander joining the pack.
Barclays has slashed rates on several two-year and five-year fixed mortgages for both new buyers and those looking to remortgage. On the other hand, Santander has just dropped sub-4% rates, following a reduction of up to 0.18% on their fixed rates.
Mortgage rates have tumbled almost daily for the past few weeks, with the average two-year fixed mortgage rate dropping to its lowest point since September 2022.
According to Moneyfacts, this downward trend has led to the biggest month-on-month reduction in over six months. Rachel Springall, finance expert at Moneyfacts, commenting on the situation, said:
"The competitive spirit among lenders has resulted in numerous tweaks to their mortgage ranges, dramatically reducing the typical shelf-life of a mortgage to just 19 days."
Good news for borrowers with smaller deposits as well, with the average two-year fixed mortgage at 90% loan-to-value dropping to its lowest level since October 2022, and product choice at 90% and 95% loan-to-value remaining at a 17-year high.
With millions of homeowners due to come off low fixed rate mortgages over the next year, the need for appealing deals is crucial to secure new business from lenders.
Tomorrow, Barclays will be offering the least expensive five-year fixed rate deal for homebuyers with a 40% deposit, with a rate as low as 3.79%. This deal comes with a £899 fee, making monthly repayments for a £200,000 mortgage over 25 years around £1,033.
However, keep in mind that this Barclays offer, referred to as a "Green Home deal," is only available for homes with an energy performance certificate of A or B.
For those seeking the most energy-efficient homes, there's plenty of good news. Barclays is now offering a 3.95% deal for buyers with a 25% deposit and a two-year fix. TSB currently offers a lower rate at 3.94%.
If you're considering remortgaging, Barclays' changes might benefit you too. Their lowest two-year fixed remortgage rate is falling to 3.88%, while their five-year deal drops to 3.89%. These rates are exclusively for homeowners with at least 40% equity.
David Hollingworth, associate director at L&C Mortgages, shares his insight on the current mortgage market:
"Mortgage rates are dropping as lenders vie for dominance in the market. Two-year rates are now on par with, if not slightly below, five-year rates. However, recent shifts in the UK-US trade deal and the split vote to cut the Bank of England base rate might impact the rate of these cuts."
Despite the optimistic outlook, the extent and speed of further rate cuts remain uncertain due to lingering global economic uncertainty. Stay tuned for further updates on this competitive housing market!
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Starting tomorrow, Barclays will offer the cheapest five-year fixed rate deal on the market for homebuyers with a 40% deposit at 3.79%. This deal comes with a £899 fee. For a £200,000 mortgage being paid over 25 years, monthly payments would be approximately £1,033.
Keep in mind, this offer is only for homes with an energy performance certificate of A or B, referred to as a "Green Home deal" by Barclays.
The hunt for energy-efficient homes is on, and Barclays has some sweet news. Starting today, they're offering a 3.95% deal for those buying homes with a 25% deposit and a two-year fix. TSB offers a lower rate at 3.94%.
For those considering remortgaging, Barclays has some attractive options as well. Their lowest two-year fixed remortgage rate drops to 3.88%, while their five-year deal sinks to 3.89%. These offers are for homeowners with at least 40% equity in their homes.
Further Reading
Will Interest Rates Dive to 2.75%? Should You Grab a Tracker Mortgage?
"The mortgage market is bustling with falling rates as lenders thrive in the competition," said David Hollingworth, associate director at L&C Mortgages. "Two-year rates are now at parity with, and sometimes even underselling, five-year rates."
However, recently swings in the UK-US trade deal and a split vote to cut the Bank of England base rate might slow the rate of these cuts. It will be interesting to see how the market reacts to future developments and the improvement in US-China negotiations. Stay tuned for further updates on the mortgage market!
- The ongoing decrease in mortgage rates has stirred significant competition in the UK housing market, with lenders like Barclays and Santander offering attractive mortgages for both new buyers and those remortgaging.
- In response to the competitive landscape, Barclays has slashed interest rates on several two-year and five-year fixed mortgages, making them an appealing option for property investors seeking competitive personal-finance deals.
- For business-minded individuals, the shaken-up mortgage market offers an opportunity to invest in property with favorable financing options through reduced mortgage rates, fostering potential growth in the property market.
- As more homeowners come off low fixed-rate mortgages over the next year, they should stay informed about financing options, such as remortgaging deals offered by lenders like Barclays, to maintain competitive personal-finance and continue building their savings.
