Three major lenders have reduced some of their mortgage rates ahead of the Bank of England’s expected base rate cut next week.
Uswitch figures show that the average two-year fixed mortgage has risen slightly to 4.66%, up from 4.55% last week. Five-year fixes have also edged up, now averaging 5.06% compared with 4.84% previously. These averages are based on 75% loan-to-value deals, meaning borrowers need at least a 25% deposit.
UK inflation has eased for the first time in five months, dropping to 3.6%. This has strengthened expectations that the Bank of England will lower interest rates on 18 December from 4% to 3.75%. As lender rates tend to follow the base rate, any reduction would be welcome news for those with mortgages.
The autumn budget also introduced measures affecting homeowners, including a new mansion tax. Properties worth more than £2m will face an annual charge starting at £2,500, rising to £7,500 for homes valued above £5m. The levy is planned to begin in April 2028.
Moneyfacts’ Rachel Springall said fixed mortgage rates have continued to fall, with November seeing significant reductions. She noted that the average five-year fix dipped below 5% for the first time in over two years, reaching its lowest level since before the September 2022 mini-budget.
Jack Tutton of SJ Mortgages said confidence is building due to expectations of a rate cut before Christmas, with more reductions potentially coming in 2026. He added that many borrowers will be hoping for even lower rates from more lenders.
NatWest, Halifax and Nationwide have all made small price cuts to some of their most competitive deals. Below is a look at this week’s key offerings from major lenders.
HSBC mortgage rates
HSBC’s current two-year fix is priced at 3.66% with a £999 fee, unchanged from last week, or 3.63% for premier customers. The five-year fix remains at 3.88%, also with a £999 fee. These apply to 60% LTV borrowers with at least a 40% deposit.
HSBC also offers 95% LTV products, requiring only a 5% deposit, though the rates are higher: 4.84% for a two-year fix and 4.77% for a five-year fix. The smaller the deposit, the higher the rate, as lenders see these cases as riskier.
To help first-time buyers, HSBC has introduced a cashback incentive of up to £2,000, designed to help with upfront costs and potentially spark more competition in the market.
NatWest mortgage rates
NatWest has lowered its two-year fix to 3.62% with a £1,495 fee, down from 3.71% last week. Its cheapest five-year fix is now 3.75%, also reduced from 3.83%. Both require a 40% deposit.
Barclays mortgage rates
Barclays continues to offer a two-year fix at 3.63% with an £899 fee, and its five-year fix remains at 3.82%. The lender has also launched new 95% LTV products for new-build houses up to £600,000, halving the previous 10% deposit requirement for some buyers.
Earlier this year, Barclays introduced its “Mortgage Boost” scheme, allowing family or friends to join an application to increase borrowing potential without providing extra cash. This can significantly raise affordability for buyers with lower incomes.
Nationwide mortgage rates
Nationwide’s two-year fix stays at 3.83%, while its five-year fix has dropped to 4.04%. A 40% deposit and a £999 fee apply to both. The lender continues to support first-time buyers through its Helping Hand scheme, which allows eligible applicants to borrow up to six times their income. On average, borrowers can access an extra £28,000, and in some remortgage cases, more than £40,000.
Halifax mortgage rates
Halifax has reduced its two-year fix to 3.82%, down from 3.99%. Its five-year fix remains at 3.98%, and its 10-year fix stays at 4.87%.
Santander mortgage rates
Santander recently withdrew certain 60% LTV products for first-time buyers after swap rate changes. It still offers higher LTV options, with two-year fixes from 4.06% and five-year fixes from 4.19%. For home movers with a 40% deposit, rates now start at 3.51% for a two-year fix and 3.72% for a five-year fix.
Cheapest deal available
NatWest currently has some of the most competitive rates for first-time buyers, offering a two-year fix at 3.62% and a five-year fix at 3.75%, although both require a substantial 40% deposit.
More UK borrowers are choosing mortgage terms of 35 years or more, with an increasing number extending repayments into later life. Some lenders are also easing affordability rules: Skipton Building Society now allows borrowing up to 5.5 times income, and Leeds Building Society has reduced its minimum income requirement for first-time buyers.
Recent years of higher interest rates have led to increased repayments for many households, as lenders passed on the Bank of England’s base rate rises. Homeowners will be hoping for further cuts, while savers may prefer rates to stay steady.
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