Homeowners who need to remortgage can lock into a two-year deal below five per cent for the first time in months.
The move by Barclays to reduce fixed home loans by 0.3 percentage points ignites hopes that other lenders will also slash deals below five per cent.
It comes after inflation eased much faster than expected – raising hopes that the Bank of England will not raise its base rate next month.
Homeowners with 40 per cent equity can now secure a two-year deal at 4.98 per cent through Barclays with a £999 fee.
The six largest mortgage lenders, including Halifax, HSBC and NatWest, are all now offering mortgage rates of less than five per cent.
Homeowners with 40 per cent equity can now secure a two-year deal at 4.98 per cent through Barclays with a £999 fee (Stock Image)
Nationwide last week cut its two-year deals below five per cent but only to new customers who are moving home. However, Barclays is the first to offer a two-year deal below this threshold for remortgages.
The average two-year fix is now 6.19 per cent, with five-year fixes at 5.78 per cent, according to rate scrutineer MoneyfactsCompare.
Craig Fish, of Lodestone Mortgages and Protection, described the rate war as ‘well and truly under way’.
He added: ‘More lenders are likely to follow. There is a real chance we could see a sub four per cent five-year fix this side of Christmas and a two-year below 4.5 per cent.’
Inflation data published on Wednesday revealed that price rises had fallen to 4.6 per cent in October. Soaring inflation had led markets to predict that the base rate would need to keep rising to bring prices back under control.
In response, lenders began to pull fixed-rate deals and reprice them at much higher rates.
But although fixed rates are now falling, the news will come as cold comfort to the 900,000 homeowners who need to remortgage by next summer and will need to do so at much higher rates. Only two years ago the average two-year fixed rate mortgage was 2.3 per cent.
Justin Moy, of EHF Mortgages, warned those needing to remortgage should be proactive to find the best deal. He said: ‘For those who have already secured their new mortgage deal, don’t rely upon your lender to keep you informed of these improving rates.’
This post first appeared on Dailymail.co.uk
