Three more lenders have recently announced reductions to their mortgage rates, adding to the growing competition among providers offering some of the most attractive deals currently available.
Yorkshire Building Society, Virgin Money, and The Mortgage Works (TMW) are the latest to enter the home loan price battle. These rate cuts come as welcome news for buyers and homeowners, though experts are cautioning that this downward trend might not last for much longer.
Market analysts have pointed out that mortgage rates are unlikely to fall much further, suggesting that borrowers considering a fixed deal might want to act sooner rather than later.
Among the three, Yorkshire Building Society has made the boldest changes, slashing rates by as much as 0.55 percentage points on selected mortgage products.
One of its standout offers is now the cheapest two-year fixed rate on the market for borrowers who can put down a 40 per cent deposit. The deal is priced at 3.91 per cent and includes a £995 product fee.
To put this into perspective, someone borrowing £200,000 over a 25-year repayment term would face monthly payments of approximately £1,046.
One of the standout deals now available is a two-year fixed mortgage at 3.92 per cent for buyers with a 25 per cent deposit — currently considered the best in its category.
For those who are remortgaging and have 40 per cent equity in their property, a slightly higher rate of 3.98 per cent is being offered.
Yorkshire Building Society has also introduced the lowest three-year fixed deal currently on the market. This comes in at 3.95 per cent and includes a £995 product fee.
In addition to these offers, the lender has introduced new rates specifically aimed at first-time buyers and those with smaller deposits.
Notably, it has reduced the rate on its fee-free two-year fix for buyers with a 10 per cent deposit from 5.23 per cent down to 4.68 per cent, making it the most competitive deal in this bracket.
To give an idea of affordability, a £200,000 mortgage at this new rate would result in monthly repayments of around £1,132 over a 25-year term.
This wave of competitive pricing is especially promising for first-time buyers.
Even better, a number of lenders have also recently revised their mortgage lending criteria, meaning potential buyers may now be eligible to borrow larger amounts than before.
Rachel Springall, a finance expert from Moneyfacts, shared her thoughts on the recent developments, expressing that it’s encouraging to see Yorkshire Building Society reduce fixed rates further across its mortgage offerings. She highlighted how this will be welcome news for the millions of borrowers expected to remortgage this year. According to her, the rate reductions—particularly those tied to fee-free options or added incentives—could make a real difference for those with smaller deposits.
Virgin Money has also joined in with its own set of mortgage rate cuts, reducing some deals by as much as 0.2 percentage points. These changes will be beneficial for a wide range of borrowers, including those looking to remortgage, purchase a home, or invest in buy-to-let properties.
In particular, landlords remortgaging under their own names may find some of Virgin’s deals among the most competitive currently available. For example, one of their standout offers is a five-year fixed deal at 3.93 per cent for those refinancing at 75 per cent loan-to-value, although it does come with a 3 per cent product fee.
The Mortgage Works (TMW), which is part of Nationwide and specialises in buy-to-let lending, has also followed suit. It’s making reductions of up to 0.25 percentage points on limited company mortgage deals and trimming rates by 0.2 percentage points for landlords operating in their own name.
These changes come hot on the heels of recent cuts from other big-name lenders. HSBC and Santander both announced lower mortgage rates yesterday, and Barclays had already introduced rate reductions across several of its products last week.
Two-year fixed rates are lower than five-year fixes
Since 2022, five-year fixed mortgage rates have generally been lower than their two-year counterparts. However, this trend has started to reverse in recent weeks.
Currently, the lowest available two-year fixed rates have dipped below the cheapest five-year options. This shift may encourage more borrowers to consider shorter-term fixed deals once again.
According to data from UK Finance, borrowers were fairly evenly split in their preferences last year. About 43 per cent chose two-year fixed deals, while 45 per cent went for five-year fixes.
Chris Sykes, technical manager at Private Finance, noted that competition among lenders is heating up. Some providers are now offering rates below 4 per cent, which hasn’t been seen for quite a while.
He mentioned that Coventry Building Society, for instance, recently dropped its rates to attract new business. However, due to unexpectedly high demand, the lender was forced to raise them again soon after—a sign of how finely balanced the market is at the moment.
Sykes added that lenders currently have enough room to offer competitive rates below 4 per cent. This has been made possible by a shift in swap rates, with two-year Sonia swaps now matching or even dipping below five-year swaps.
This change has created a situation not seen in recent years—where two-year fixed deals are starting to look more appealing and cost-effective than five-year options.
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