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Four Major Lenders Cut Mortgage Rates Amid Rising Competition
Several of the UK’s largest mortgage lenders have announced a series of rate reductions on selected home loan products, sparking what experts are calling a “mini price war” across the market. The timing comes just ahead of the upcoming autumn budget, with banks aiming to capture renewed interest from buyers who have been hesitant amid ongoing uncertainty in the housing sector.
This new wave of mortgage rate cuts highlights growing competition among high street banks, as they attempt to appeal to cautious homebuyers navigating a slow property market. The latest data from comparison site Uswitch shows that the average rate for a two-year fixed mortgage remains unchanged at 4.75%, while the average five-year fixed mortgage holds steady at 5.04%. Both averages are based on 75% loan-to-value (LTV) products, meaning borrowers must provide a deposit of at least 25%.
Barclays was one of the first to make a move, unveiling five new five-year mortgage deals with reduced interest rates. These span from 60% to 95% LTV, offering borrowers greater flexibility depending on their deposit size. The most competitive rate currently available from Barclays starts at 3.91%, which places the bank in a strong position to draw interest from prospective buyers.
The move by Barclays appears to have triggered a broader market response, with other major lenders quickly following suit. HSBC, Santander, and NatWest each introduced new rate cuts across various fixed-rate mortgage options in an attempt to stay competitive. This wave of adjustments signals a notable shift in the market, as lenders adapt to a stabilising but still cautious borrowing environment.
HSBC has announced reductions across several of its residential products, although it did not reveal specific figures. Santander, meanwhile, made more aggressive cuts, lowering the rates on some of its three-year fixed deals by up to 0.36%. NatWest has also joined the race, reducing its two-year fixed rate to 3.77%, marking one of the most competitive short-term deals currently available from a major lender.
These rate changes come shortly after the Bank of England decided to maintain the base rate at 4%. Analysts believe that while there is increasing speculation about future cuts, the Bank may hold off until inflation shows a more consistent downward trend. For now, uncertainty surrounding the next policy move continues to influence lenders’ pricing strategies.
Inflation data published ahead of the Bank’s September meeting showed that the UK’s Consumer Price Index (CPI) rose by 3.8% in the year to September — the same level recorded in July and August. This persistent inflation has divided investors’ expectations, with some predicting a potential rate cut in December while others anticipate the first change early next year.
Financial experts say the current environment has led to a more competitive mortgage market, as banks attempt to gain an advantage before the next round of monetary policy adjustments. Aaron Strutt, a mortgage broker at Trinity Financial, commented that a “mini mortgage price war” has now begun, with five major banks lowering their fixed-rate deals to attract more borrowers.
Strutt also noted that two- and three-year fixed mortgages are still typically cheaper than five-year deals, despite many borrowers preferring the security of longer-term repayments. He explained that while homebuyers want to keep their monthly payments as low as possible, they also fear taking on variable costs that could rise unexpectedly in the future.
The good news for potential buyers is that the Bank of England is expected to start reducing its base rate within the next few months, possibly before the end of the year. If this happens, borrowers could see further drops in fixed-rate deals, leading to slightly more affordable mortgage options for both new buyers and those looking to remortgage.
Among the recent updates, HSBC has introduced a five-year fixed rate at 3.99% with a £999 product fee — a small but welcome drop from last week’s 4.06%. Customers with a premier standard account can access an even lower rate of 3.96%. Its two-year fixed deal has also decreased from 3.90% to 3.84%, both based on a 60% LTV mortgage, meaning the borrower must put down a 40% deposit.
NatWest has been equally active, reducing its five-year fixed mortgage to 3.90% with a £1,495 fee and its two-year fixed rate to 3.77%. In both cases, borrowers are required to have a deposit of at least 40%. Similarly, Barclays has adjusted its two-year fixed rate from 3.92% to 3.86%, also with an £899 fee, while rolling out a series of other cuts that will take effect later this week.
Barclays has also reintroduced its “Mortgage Boost” initiative, designed to help customers borrow more towards the purchase of a new home. Under this scheme, family members or close friends can be added to the mortgage application to increase the total borrowing capacity — without the need to provide direct funds or larger deposits. This arrangement allows applicants to combine incomes and secure larger loans.
Nationwide Building Society, on the other hand, has opted to keep its five-year fixed rate steady at 4.22%, and its two-year fixed deal for first-time buyers remains at 3.99%. Through its “Helping Hand” scheme, eligible first-time buyers can borrow up to six times their annual income, allowing them to access homes that would otherwise be out of reach. This initiative is expected to help around 10,000 additional buyers each year.
Halifax, part of Lloyds Banking Group, currently offers a five-year fixed rate of 4.17% and a two-year fix at 4.02%, both at 60% LTV with a £999 product fee. Meanwhile, Santander has made targeted changes to its range, including the withdrawal of some 60% LTV products for first-time buyers on loans under £250,000, in response to recent market shifts.
At present, NatWest offers the lowest five-year fixed rate among the major lenders at 3.90%, while HSBC’s two-year fixed deal at 3.84% remains the cheapest short-term option. Both, however, require a significant 40% deposit, meaning the best rates are still reserved for those with stronger financial positions. As the market continues to evolve, these competitive moves could bring renewed activity and optimism to the UK housing sector — particularly if the Bank of England begins to ease monetary policy in the months ahead.
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