UK mortgage lenders have started reducing rates across a range of fixed-term products after the Bank of England decided to keep its base rate unchanged. This latest development has injected some renewed optimism into the housing market, suggesting a gradual improvement in borrowing conditions for homebuyers and existing mortgage holders alike.
The decision to maintain the rate at 4% came as the Bank continues to monitor inflation and overall economic stability. Although the base rate has remained at this level for several months, the ripple effect is now being felt in the mortgage market as lenders compete to attract borrowers. For many, these rate cuts are a sign that the worst of the mortgage turmoil seen in recent years may finally be easing.
According to figures released by Uswitch, the average rate for a two-year fixed mortgage fell to 4.59% this week, down from 4.75% previously. Similarly, the average five-year fixed rate slipped slightly to 5.03% from 5.04%. These figures apply to 75% loan-to-value (LTV) mortgages, meaning buyers need a 25% deposit. While the changes may appear minor, they mark a meaningful shift in lender sentiment, showing an increased willingness to make borrowing more affordable.
Nationwide Building Society was among the first to announce new mortgage rate reductions, cutting some products by up to 0.25 percentage points. The changes span two, three, five, and even ten-year fixed-rate deals, catering to a variety of buyers and homeowners looking for longer-term financial stability. Nationwide’s move is seen as a direct response to growing consumer demand for more manageable repayments in a high-cost environment.
HSBC also made a significant change by increasing its maximum loan-to-income (LTI) ratio for premier customers to 6.5 times annual income. This move allows certain borrowers with higher earnings to access larger loans than before. In addition, Barclays and Halifax also joined the trend, lowering their mortgage rates this week to stay competitive in an increasingly active market.
These announcements came shortly after the Bank of England’s decision to hold interest rates steady, which gave lenders more confidence to make adjustments. Traders now expect a possible rate cut in December that could lower the base rate to 3.75%, providing even greater relief to borrowers who have faced rising repayment costs since 2021.
Meanwhile, inflation figures showed that the UK’s consumer price index (CPI) grew by 3.8% in the year to September. While the figure remained unchanged from July and August, it suggests that inflationary pressures are stabilising. The Bank of England’s cautious approach reflects the need to balance inflation control with supporting household finances and the wider economy.
Financial experts have noted that mortgage affordability has already started to improve for some homeowners. Alice Haine, personal finance analyst at Bestinvest, highlighted that even though the Bank’s rate decision remained unchanged, the combination of falling mortgage rates, slower house price growth, and rising wages has created a slightly more comfortable lending environment. She added that while many will welcome this progress, uncertainty surrounding the upcoming Budget and potential property tax changes could still unsettle both buyers and existing homeowners.
Haine also noted that mortgage rates today are far more manageable than they were three years ago when many fixed rates exceeded 6%. This improvement, she said, is reassuring for borrowers but offers little comfort to those now coming off ultra-low fixed rates secured before the Bank began raising rates in late 2021. These homeowners will likely experience a sharp increase in monthly payments once their deals end, forcing many to reassess their household budgets.
Experts advise borrowers nearing the end of their fixed terms to start exploring new deals early rather than waiting for rates to fall further. The mortgage market has been volatile in recent weeks, with frequent rate adjustments and shifting expectations about future Bank of England decisions. Acting promptly could help secure a better rate before potential changes occur.
Among the current offerings, HSBC’s five-year fixed rate stands at 3.99% with a £999 product fee for a 60% LTV mortgage, or 3.96% for premier customers. Its two-year fixed deal remains at 3.84% with the same fee. Borrowers with smaller deposits, however, will face higher rates; for instance, HSBC’s 95% LTV mortgages start at 4.87% for a two-year fix and 4.79% for a five-year fix.
NatWest has also trimmed its mortgage prices, now offering a five-year fixed deal at 3.84% with a £1,495 fee and a two-year fix at 3.71%, both requiring at least a 40% deposit. These adjustments make NatWest one of the more competitive lenders currently operating in the UK’s mortgage market.
Barclays has followed suit, reducing its five-year fix to 3.98% and its two-year fix to 3.73%, both with an £899 product fee. Earlier this year, Barclays introduced its ‘Mortgage Boost’ initiative, allowing family members or friends to help increase a borrower’s purchasing power without directly gifting money or providing a larger deposit. The scheme aims to make homeownership more accessible, particularly for younger buyers struggling to meet deposit requirements.
Nationwide, meanwhile, has been proactive in supporting first-time buyers with rate cuts across much of its fixed-rate range. Its five-year fix now sits at 4.13%, down from 4.22%, while the two-year fix for first-time buyers has dropped to 3.89%. The lender has also eased some affordability criteria, allowing eligible borrowers to secure larger loans. Carlo Pileggi, Nationwide’s head of mortgage products, confirmed that a number of the lender’s rates are now below 4%, showing strong competition in the market.
Elsewhere, Halifax, part of Lloyds Banking Group, offers a five-year fix at 4.17% and a two-year rate at 4.01%, both slightly lower than the previous week. Santander has adjusted its first-time buyer range too, withdrawing some 60% LTV products but maintaining higher-LTV deals for borrowers with smaller deposits. Meanwhile, building societies such as Skipton and Leeds are extending support to first-time buyers by offering lending up to 5.5 times annual income and reducing minimum income requirements, respectively.
NatWest currently holds some of the cheapest mortgage rates available, with 3.71% for a two-year fix and 3.84% for a five-year fix, although both require a substantial 40% deposit. As lenders compete to attract new borrowers, the mortgage landscape appears to be gradually shifting in favour of consumers. Still, with 1.3 million fixed-rate deals set to expire this year, according to UK Finance, many households will be watching closely for further rate reductions in the coming months.
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