Two of the UK’s largest lenders, HSBC and Halifax, have recently reduced interest rates on select mortgage deals, despite uncertainty surrounding the upcoming autumn Budget. These changes come as homeowners and first-time buyers closely monitor the market for favourable deals.
According to data from Uswitch, the average two-year fixed mortgage has risen slightly to 4.69% this week from 4.59%, while the average five-year fixed deal has remained at 5.03%. These rates assume a 75% loan-to-value (LTV) mortgage, meaning buyers need at least a 25% deposit.
HSBC and Halifax made cuts, while other lenders opted to maintain their current rates. The decision follows the Bank of England’s move to hold interest rates at 4%, leaving traders and borrowers speculating about a possible reduction in December. Analysts predict that rates could fall to around 3.75% if the Bank of England decides to act.
Inflation data shows the UK’s consumer price index (CPI) grew by 3.8% in the year to September, unchanged from July and August. This stability in inflation has provided some reassurance to borrowers as they plan ahead for the autumn Budget.
For borrowers with smaller deposits, the cost of mortgages has fallen to its lowest level in three years. Moneyfacts reports that the average two-year fixed rate for 95% LTV mortgages has dropped to 5.41%, the lowest since September 2022, while the equivalent rate at 90% LTV has fallen to 5.24%.
Across the wider market, the average two- and five-year fixed rates have slipped slightly to 4.94% and 5.01%, respectively. The Moneyfacts Average Mortgage Rate has decreased to 4.99%, down from 5.02% a month ago and 6.07% a year ago.
Two-year tracker rates edged down slightly to 4.66%, while the Standard Variable Rate remained at 7.27%, below its 2023 peak of 8.19%. Meanwhile, the average shelf-life of a mortgage deal has shortened to just 21 days, reflecting faster market activity and increased competition among lenders.
The total number of available mortgage products has dropped to 6,918. However, the number of 95% LTV deals has risen to 465, the highest since March 2008. Rachel Springall, finance expert at Moneyfacts, noted that these reductions are particularly welcome for borrowers with limited deposits and first-time buyers.
HSBC’s current deals include a five-year fixed-rate mortgage at 3.93% with a £999 fee, reduced from 3.99%. Their two-year fixed rate is now 3.73% for borrowers with a 60% LTV, down from 3.84%. Higher LTV mortgages, such as 95%, still carry higher rates due to the increased risk perceived by lenders.
NatWest offers a five-year fixed deal at 3.84% and a two-year fixed at 3.71%, both requiring a 40% deposit. Barclays has kept its main deals unchanged but reduced several others, including two-year fixes from 4.19% to 4.02% and five-year fixes from 4.22% to 4.12% for 85% LTV loans.
Barclays has also introduced 95% LTV mortgages for new-build homes priced up to £600,000, allowing first-time buyers to halve their previous deposit requirements. Their Mortgage Boost initiative helps borrowers increase their lending potential by including a family member or friend on the mortgage application, enhancing affordability without needing a larger deposit.
Nationwide maintains competitive offerings, with first-time buyers able to secure a two-year fixed rate of 3.89% and a five-year fixed rate of 4.13%, both requiring a 40% deposit and a £999 upfront fee. Existing customers nearing the end of their current deals can access a two-year fixed rate of 4.79% with a 10% deposit.
Halifax has reduced its five-year fixed rate to 4.02% for a 60% LTV mortgage, down from 4.17%. Two-year fixed deals for first-time buyers remain at 4.01% with a £999 fee. Halifax also offers a ten-year fixed rate of 4.87%, catering to borrowers seeking long-term stability.
Santander has withdrawn certain 60% LTV mortgage products for first-time buyers on lower-value properties but continues to provide options for higher LTVs. Its cheapest two-year and five-year fixes stand at 4.31% and 4.45%, respectively.
Overall, NatWest currently offers the lowest rates among major lenders, though these require a substantial 40% deposit. Meanwhile, longer mortgage terms of 35 years or more are increasingly popular, particularly among older borrowers stretching repayments into their 70s. Building societies like Skipton and Leeds have also eased borrowing requirements, supporting first-time buyers with higher multiples of income and reduced deposit thresholds.
With 1.3 million fixed-rate deals due to expire this year, many homeowners are waiting to see if the Bank of England will cut rates, hoping for relief on repayments. At the same time, savers are likely watching closely for the opposite, hoping rates remain high to benefit from savings returns.
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