Mortgage rates are continuing to fall this week, as two more high street lenders have announced lower home loan deals.
Barclays has made reductions to a range of two-year and five-year fixed rates, which are available for both buyers and those looking to remortgage.
At the same time, Santander has launched a series of new rates below 4 per cent, following its decision to cut fixed rates by up to 0.18 percentage points.
Mortgage rates have been steadily decreasing over the past few weeks. According to Moneyfacts, the average two-year fixed mortgage rate fell month-on-month by the largest margin in over six months.
In fact, the average two-year fixed mortgage rate has now dropped to its lowest point since the beginning of September 2022, prior to the infamous ‘mini-Budget’.
Rachel Springall, a finance expert at Moneyfacts, commented, “The momentum of rate cuts was widespread throughout April, with lenders rushing to adjust their mortgage offerings. This led to a reduction in the average shelf-life of a mortgage, which now stands at 19 days, down from 21 days a month earlier.”
This flurry of activity resulted in significant cuts to both the two- and five-year fixed mortgage rates, with the two-year fixed rate experiencing the largest fall in over six months.
For borrowers with smaller deposits, there is also good news. The average two-year fixed mortgage at 90 per cent loan-to-value has fallen to its lowest level since October 2022. Moreover, the product range at both 90 per cent and 95 per cent loan-to-value remains at a 17-year high.
“Millions of consumers will be coming off low fixed-rate mortgages over the next year, and they will need both the support and willingness of lenders to secure new deals,” added Springall.
Starting tomorrow, Barclays will be offering the lowest five-year fixed-rate deal on the market for those buying with a 40 per cent deposit.
The 3.79 per cent deal comes with a £899 fee. For example, someone with a £200,000 mortgage over 25 years will pay £1,033 a month.
However, it’s important to note that this is a Green Home deal, meaning it is only available to those purchasing homes with an energy performance certificate of A or B.
For those purchasing energy-efficient homes, there is plenty of good news. Barclays is now offering a 3.95 per cent deal for buyers with a 25 per cent deposit on a two-year fixed rate. TSB is the only competitor offering a slightly lower rate of 3.94 per cent.
Households looking to remortgage may also benefit from Barclays’ changes. The bank’s lowest two-year fixed remortgage rate has fallen to 3.88 per cent, while its lowest five-year deal is now 3.89 per cent. These rates are available for those with at least 40 per cent equity in their homes.
David Hollingworth, associate director at L&C Mortgages, commented, “Mortgage rates continue to fall as lenders strive to keep up with the competition. This has led to more appealing rates across the board, with two-year rates now often on par with, or even slightly lower than, five-year rates.”
However, he also noted that recent developments could affect the trend. “The UK-US trade deal and a split vote on cutting the Bank of England base rate pushed swap rates up at the end of last week. This could slow the momentum of rate cuts, and we will have to see how the money markets react to the improvements in US/China negotiations.”
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