Several major lenders have announced new mortgage rate cuts aimed at helping first-time buyers with smaller deposits.
Santander, NatWest and Barclays have all revealed reductions to their first-time buyer mortgage products, with changes taking effect from this week.
Santander confirmed it will lower rates across its two, three and five-year fixed deals by as much as 0.32 percentage points. These cuts apply to buyers putting down deposits of between 5 and 15 per cent. The move follows a similar decision by Nationwide Building Society, which recently trimmed some of its mortgage rates by up to 0.16 percentage points.
Under Santander’s revised pricing, first-time buyers with a 15 per cent deposit can now access fixed rates starting from 3.92 per cent. On a £200,000 mortgage spread over 30 years, this would mean monthly repayments of around £946.
NatWest has also announced reductions to its two-year fixed-rate mortgages with no product fee. These cuts are worth up to 0.12 percentage points and are targeted at buyers with a 5 per cent deposit. New rates range between 4.69 per cent and 4.81 per cent.
Barclays has joined the competition by lowering its two-year fixed-rate product for buyers with a 5 per cent deposit from 4.92 per cent to 4.6 per cent. For someone borrowing £200,000 over a 30-year term, this would reduce monthly payments to roughly £1,025.
Santander has also adjusted its longer-term deals. Buyers with a 5 per cent deposit can now secure a five-year fixed rate at 4.72 per cent, while those with a 15 per cent deposit can access a five-year fix at 4.17 per cent, subject to a £999 arrangement fee.
The bank has extended these reductions to its new-build mortgage products as well, cutting rates by up to 0.32 percentage points for first-time buyers purchasing newly built homes.
All of the revised deals from Santander, NatWest and Barclays are available to customers applying either directly or through mortgage brokers.
Mortgage advisers believe these reductions could continue if inflation figures improve. Samuel Mather-Holgate of Mather and Murray Financial said lenders are increasingly focusing on higher loan-to-value mortgages, particularly those at 95 per cent.
He explained that this shift shows banks are becoming more competitive in the first-time buyer market and that further cuts could follow if economic conditions allow.
Louis Mason from Oportfolio Mortgages described first-time buyers as the most sought-after customers in today’s mortgage market, noting that lenders are keen to attract them with better deals and incentives.
Recent figures from Moneyfacts show that the number of mortgage options available to buyers with a 10 per cent deposit has reached a record high. Meanwhile, those with a 5 per cent deposit now have the widest choice of products since March 2008.
Earlier this month, Santander also launched a new product requiring just a 2 per cent deposit, provided the minimum deposit is at least £10,000. This means an eligible buyer could purchase a £500,000 home with only £10,000 upfront.
The product, called “My First Mortgage”, is a five-year fixed deal with a rate of 5.19 per cent, no product fee and £250 cashback. A buyer borrowing £490,000 over 30 years would face monthly repayments of around £2,689.
Mortgage brokers say the latest wave of rate cuts highlights how aggressively lenders are competing for first-time buyers. Richard Davidson from onlinemortgageadvisor.co.uk described Santander’s approach as particularly bold, especially following its move into 98 per cent loan-to-value lending.
He added that the bank appears determined to gain market share and challenge other major lenders by offering some of the most competitive deals available.
Omer Mehmet of Trinity Finance agreed, saying lenders are now actively targeting new buyers and that this is creating real opportunities for those hoping to step onto the property ladder.
He said that falling rates improve affordability and could make a meaningful difference for people who have been struggling to save enough for a deposit or meet monthly repayment costs.
Overall, experts believe the surge in new deals and lower rates shows that the first-time buyer mortgage market is heating up, with banks eager to attract customers and revive activity across the housing sector.
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