Two major UK lenders have now moved further into the sub-4% mortgage range following the Bank of England’s latest interest rate cut. NatWest has improved its two-year fixed deal, with some first-time buyers able to secure rates starting from 3.73%, depending on the deposit size.
Recent figures from Uswitch show that the average two-year fixed mortgage rate currently stands at 4.68%, while the average for a five-year fix is slightly higher at 4.83%. These rates mark a gradual easing from previous months.
The Bank of England has reduced the base rate to 4%, offering some relief for homeowners who may see their monthly mortgage repayments decrease. However, inflation remains above target, with the Consumer Price Index (CPI) measuring 3.6% in the 12 months to June — still notably higher than the Bank’s 2% goal.
Rightmove’s latest data shows that the average two-year fixed rate at 80% loan-to-value (LTV) has fallen from 5.21% to 4.38% over the past year. Similarly, the average five-year fixed rate at the same LTV has dropped from 4.91% to 4.52%.
Matt Smith, mortgage expert at Rightmove, noted that this marks the third Bank Rate cut of the year, in line with market forecasts. He explained that some lenders had already made modest reductions in recent weeks, helped by developments in global trade tariffs.
Smith believes that today’s rate cut could act as a catalyst for further reductions, although he does not anticipate significant drops due to strong competition among lenders. With the largest supply of homes for sale in a decade, he says lenders are keen to attract borrowers, while updated affordability rules are enabling more buyers to access higher borrowing limits responsibly.
Market expectations suggest there could be another interest rate cut before the end of the year, with the possibility of two. Should that happen, lenders may again trim their rates in response, potentially boosting market activity in the second half of the year.
Nationwide, the UK’s biggest building society, has also made a notable move to support first-time buyers by lowering its minimum salary requirement from £35,000 to £30,000. The change could help around 10,000 more people get onto the property ladder.
Amanda Bryden, head of mortgages at Halifax, said that although challenges remain for those looking to move home or buy their first property, the combination of easing mortgage rates and rising wages is slowly improving affordability.
She added that more flexible affordability checks are also having a positive impact, helping the housing market remain resilient despite broader economic pressures. Halifax expects modest house price growth to continue throughout the rest of the year.
In the latest round of rate changes, NatWest and Santander have both cut mortgage rates, while other leading lenders have held their rates steady, having already adjusted in anticipation of the Bank of England’s widely expected decision.
HSBC mortgage deals
HSBC’s current five-year fixed mortgage rate stands at 3.94%, the same as last week. Customers holding a Premier Standard account with the bank can access a slightly lower rate of 3.91%.
For two-year fixed deals, the most competitive option remains at 3.78% with a £999 fee, unchanged from the previous week.
These rates are based on a 60% loan-to-value (LTV) arrangement, which means borrowers would need a deposit covering at least 40% of the property’s value.
HSBC also provides mortgages with a 95% LTV, allowing buyers to secure a property with just a 5% deposit. However, these come with significantly higher rates, such as 4.94% for a two-year fix or 4.79% for a five-year fix.
The difference in rates is largely influenced by a borrower’s financial profile and deposit size. Those with larger deposits benefit from lower LTV ratios, which are seen as less risky by lenders, often resulting in better mortgage deals.
NatWest mortgage deals
NatWest is now offering a five-year fixed mortgage at 3.85% with a £1,495 fee, slightly lower than the previous rate of 3.88%.
For those looking at shorter terms, the bank’s most affordable two-year fixed deal is currently set at 3.73%, down from 3.77%.
Both options require borrowers to have a deposit of at least 40% to be eligible for these rates.
Santander mortgage deals
Santander has trimmed its mortgage rates for first-time buyers, with a five-year fixed deal now available at 3.94%, down from 4.01% the previous week. This offer carries a £999 fee and requires a 40% deposit.
The bank’s two-year fixed option has also seen a small reduction, dropping to 3.82% from 3.84%, with the same £999 fee and deposit requirement.
Barclays’ five-year fixed mortgage remains at 3.99%, unchanged from last week. Previously, the lender’s lowest two-year fixed deal stood at 3.76% (or 3.75% for Premier account holders), but it has now risen to 3.84% (3.83% for Premier customers).
Despite this, Barclays has reduced a range of other rates across its products. Examples include:
- A two-year fixed at 4.22% with an £899 fee at 85% LTV, now 4.12%
- A two-year fixed at 4.63% with no product fee at 85% LTV, now 4.43%
- A two-year fixed at 5.05% with no fee at 95% LTV, now 4.88%
- A two-year fixed at 4.75% with a £1,999 fee at 85% LTV, now 4.39%
- A five-year fixed at 4.29% with an £899 fee at 85% LTV, now 4.12%
- A five-year fixed at 4.37% with no fee at 85% LTV, now 4.23%
- A five-year fixed at 4.99% with no fee at 95% LTV, now 4.80%
- A five-year fixed at 4.60% with a £1,999 fee at 85% LTV, now 4.20%
- Green Home two-year fixed at 4.12% with an £899 fee at 85% LTV, now 4.02%
- Green Home five-year fixed at 4.19% with an £899 fee at 85% LTV, now 4.02%
Barclays has also introduced a new initiative called Mortgage Boost to help both new and existing customers secure larger loans. The scheme allows a family member or friend to be added to a mortgage application to increase borrowing power, without having to gift or lend money directly.
For example, under standard criteria, a buyer earning £37,500 a year with a £30,000 deposit could borrow up to £168,375 — enough for a home valued at around £198,375.
With Mortgage Boost, if a second applicant with the same £37,500 income joins the mortgage, the borrowing limit could rise to £270,000, enabling the purchase of a property worth up to £300,000.
Nationwide mortgage deals
Nationwide (NBS.L) is now offering its lowest five-year fixed mortgage rate for first-time buyers at 4.14%. For those opting for a two-year fix, the rate remains at 3.94%. Both products require a 40% deposit and carry a £1,499 fee.
Customers currently on Nationwide’s Standard Mortgage Rate (SMR) will see a reduction of 0.25 percentage points, bringing the SMR down to 6.74% from 1 September 2025.
Existing Nationwide borrowers with tracker mortgages will also benefit from the Bank Rate cut, as their payments will automatically adjust in line with the change from the same date.
Carlo Pileggi, Nationwide’s senior mortgage manager, said the lender remains committed to offering competitive rates for a broad range of borrowers. He highlighted that more of their mortgage deals are now under 4%, making them a strong option for first-time buyers, movers, and those seeking a better deal.
Nationwide has also eased income requirements for first-time buyers. A single applicant will now need a salary of £30,000, down from £35,000, while joint applicants will require £50,000 combined, reduced from £55,000. This change is expected to open the door for an extra 10,000 first-time buyers annually.
As the UK’s second-largest mortgage lender — and the top provider to first-time buyers in 2024 — Nationwide has applied to the Prudential Regulation Authority to expand its capacity for high loan-to-income lending.
Much of its high LTI lending is done via the Helping Hand scheme, which allows eligible first-time buyers to borrow up to six times their income. This can enable borrowing of around 33% more than standard lending limits. Since its launch in 2021, Helping Hand has supported roughly 60,000 people in buying their first home.
The lender has also updated its affordability checks by lowering stress test rates by between 0.75 and 1.25 percentage points. This adjustment could help buyers and remortgagers secure larger loans.
On average, applicants may now borrow an extra £28,000, with some remortgagers able to access up to £42,600 more.
Nationwide has reduced both its standard stress rate and the one applied to eligible buyers and home movers fixing their deal for at least five years.
Halifax mortgage deals
Halifax, the UK’s largest mortgage provider, continues to offer a five-year fixed rate at 3.94% for those with a 60% loan-to-value, unchanged from last week.
The lender, part of Lloyds (LLOY.L), also maintains its two-year fixed rate at 3.79% with a £999 fee for first-time buyers. Additionally, a 10-year fixed rate is available at 4.78%.
In a recent move, Halifax has improved its five-year fixed mortgage range by increasing the amount borrowers can access, with some able to secure up to £38,000 more depending on their income.
Rachel Springall, finance expert at Moneyfacts, noted that the growing availability of low-deposit mortgage options is a positive development for both first-time buyers and those looking to remortgage. She added that the government’s encouragement for lenders to support UK economic growth is being met with an increase in mortgage product choices, which is a promising step for aspiring homeowners.
Cheapest mortgage deal on the market
NatWest is currently offering some of the most competitive mortgage rates available in the UK market. Its two-year fixed deal is priced at 3.73%, while the lender’s five-year fixed rate comes in at 3.85%. Both of these products, however, require a substantial deposit of 40%.
To put that into perspective, Halifax’s latest figures show that the average UK house price in July stood at £298,237. This means a 40% deposit would amount to roughly £120,000 — a significant sum that many buyers may find challenging to raise.
In recent years, more UK homeowners have been opting for much longer mortgage terms, with many agreements now stretching to 35 years or beyond. This trend has also seen a rise in older borrowers choosing repayment periods that extend well into their 70s, often as a way to reduce monthly payments.
One lender seeking to offer more flexibility is April Mortgages. The company allows buyers to borrow up to six times their annual income on fixed-rate loans ranging from five to 15 years. A minimum deposit of 5% is required, making it a potentially more accessible option for those without large savings.
Importantly, April Mortgages is part of the independent Dutch asset management group DMFCO. The lender’s interest rates start from 5.20%, and applicants must also pay an application fee of £195.
For those buying alone or jointly, April Mortgages makes its products available to both single applicants and co-buyers, potentially widening access to higher borrowing amounts.
Skipton Building Society has also announced steps to help more first-time buyers onto the property ladder. It will now allow them to borrow up to 5.5 times their annual income, provided they meet its lending criteria.
Similarly, Leeds Building Society has revealed it is increasing the maximum amount first-time buyers can borrow as a multiple of their earnings. Its new mortgage range is open to applicants with a household income of at least £40,000, who may now also borrow up to 5.5 times that figure.
These developments suggest that lenders are responding to ongoing affordability challenges in the housing market by relaxing borrowing limits. This could be especially helpful for aspiring homeowners struggling with rising property prices.
The push towards higher borrowing multiples comes after several years of steep mortgage repayments for UK borrowers. This has largely been driven by the Bank of England’s series of base rate increases, which have been passed on by banks and building societies.
For many households, the higher interest rates have meant stretching their budgets to meet monthly mortgage commitments. As a result, any sign of easing in the market is likely to be welcomed.
Looking ahead, UK Finance has reported that around 1.3 million fixed-rate mortgage deals will come to an end in 2025. This will place many homeowners in a position where they need to refinance, potentially at higher rates if market conditions do not improve.
For borrowers, this adds pressure on the Bank of England to cut interest rates more aggressively in the near future. A quicker reduction in the base rate could help bring mortgage costs down and ease the financial strain on households.
However, there is another side to the story. While borrowers may be hoping for lower rates, savers could prefer them to stay at or close to current levels in order to maintain better returns on savings accounts.
This ongoing push-and-pull between the needs of borrowers and savers means that the Bank of England’s decisions over the next year will be closely watched by both groups.
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