From major banks to specialist lenders, the focus appears to be on enticing customers as mortgage rates see another week of falls.
The high borrowing costs that created a more subdued market in 2023 have been improving over the course of this year, and the recent Bank of England base rate cut seems to have spurred on a more competitive tone along lenders.
The central bank cut interest rates from 5.25% to 5% at the start of this month, after inflation fell back down to more normal levels over the course of this year. Despite the fact that July’s inflation level rose once more to 2.2% after it had initially hit the Bank’s 2% target, it remains significantly lower than the 11.1% peak two years ago.
Economists hope that more rate cuts will follow as the year progresses, which is the hope of the country’s borrowers looking at taking out new products by the end of 2024.
This is good news for new or existing borrowers, and has also already created a faster pace within the housing market, with a greater level of buyer appetite returning. This is demonstrated in recent house price rises, alongside higher sales volumes across much of the country.
The latest figures from Moneyfactscompare have also revealed that a number of the UK’s lenders have brought down their mortgage rates over the last week. This has already led to many smaller, more specialist lenders following suit, and high product numbers mean a healthy range of choice for borrowers at the moment.
Fixed mortgage rates coming down
By the end of last week, a raft of major high street lenders had revealed lower rates to borrowers. This included Lloyds Bank, which had slashed fixed rates by up to 0.32%; Halifax, with the same reduction of up to 0.32%; TSB with rate cuts of up to 0.25%; HSBC with up to 0.24% cut; and NatWest with reductions of up to 0.16%.
Other cuts came from the UK’s major building societies. Nationwide reduced its fixed rates by up to 0.26%; Skipton slashed rates by up to 0.40%; Leeds Building Society made reductions of up to 0.35%.
Other competitive lenders included Furness Building Society (cut by up to 0.35%); Cumberland Building Society (up to 0.20%); Yorkshire Building Society (up to 0.20); Family Building Society (up to 0.30%); and Monmouthshire Building Society (up to 0.20%).
Smaller lenders such as Kensington, MPowered Mortgages and Gen H also reduced their fixed mortgage rates over the course of the week.
This all adds to a picture of not only cheaper lending, but a revival of the housing market as affordability and confidence improves among prospective buyers and investors.
Rachel Springall of Moneyfactscompare said: “The rate cutting trend continues which is a positive sentiment for the mortgage market as lenders are working hard to entice borrowers.”
Buy-to-let mortgage rates also improving
The buy-to-let market has also seen a boost for borrowers thanks to mortgage rates also coming down for the sector.
Over the past week, Accord Mortgages has reduced rates on its buy-to-let product range by up to 0.20%.
The Mortgage Works has also made reductions on selected buy-to-let rates for new customers by up to 0.10%, with rates starting from just 3.49% for landlords. This includes limited company buy-to-let rates, which have been reduced by the lender.
Landbay is another specialist lender to have reduced its mortgage rates, while also launching a new range of two-year and five-year fixed rate products to borrowers.
Molo Finance, which is the UK’s first fully digital mortgage lending platform, has also made rate cuts over the past week, with mortgage products available for UK residents, expats, and non-UK residents, and competitive products available for new and existing borrowers, including limited companies.
The lender also caters for houses in multiple occupation (HMOs), multi-unit freehold blocks (MUFBs), holiday lets and new-build properties.
