MAJOR lenders have kicked off the New Year by slashing mortgage rates.
Big-name banks and building societies have engaged in intense competition, sparking a price war.
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HSBC is the latest mainstream bank to slash its rates.
Halifax, the UK’s biggest lender, was the first to cut some interest rates by close to one percentage point, with brokers now expecting others to follow suit.
The bank has opted to cut rates by up to 0.92 percentage points for product transfers and 0.83 on remortgages.
It now offers a two-year fix at 4.81% for those with 25% equity in their home.
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Up until recently, typical rate cuts have only been around 0.3 to 0.4 points at a time.
Leeds Building Society then followed suit by announcing a string of cuts of up to 0.49 percentage points on its products.
HSBC today announced cuts to its fixed rates from tomorrow, in a further boost for mortgage borrowers.
According to Moneyfacts, across all deposit sizes, the average two-year fixed homeowner mortgage rate on the market is 5.92% today, down from 5.93% on Tuesday.
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The average five-year fixed homeowner mortgage rate is 5.53%, down from an average rate of 5.54% on Tuesday.
David Hollingworth, associate director at L&C Mortgages, said: “These cuts are just the latest salvo in an increasingly fast-moving market.
“Although borrowers coming to the end of their current fixed rate this year will still be looking at a rise in payments, these new lower rates will at least take some of the sting out of the inevitable rise.”
David says HSBC’s move is “notable” because its rates are on offer to borrowers looking to remortgage, rather than pricing which favours home movers – as has been done recently.
He added: “These cuts follow hot on the heels of new year improvements by Halifax and others will be bound to follow suit.
“We thought the new year would start with a bang and that’s proving to be the case.”
The Bank of England (BoE) has increased rates steadily for nearly two years now, the base rate currently stands at 5.25%.
Rising interest rates have led to the cost of mortgage borrowing increasing, which is pricing out many buyers.
This has caused lenders to fall behind on their targets.
The BoE will next vote on whether to cut rates on February 1 before a further meeting on March 21.
Despite the BoE’s insisting that rate cuts aren’t yet on the cards, many experts believe slowing wage growth and sharply falling inflation will give policymakers room to start reducing in the first half of this year.
Below we reveal what each major lender is doing with their rates.
Halifax
Halifax was the first to kick off the rate cuts.
The bank reduced rates by up to 0.92 percentage points for product transfers and 0.83 on remortgages.
It reduced its two-year fixed-rate remortgage from 5.64% to 4.81% on Tuesday.
Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, said: “We keep a constant eye on markets to ensure we offer value to new and existing customers.”
HSBC
HSBC’s new deals include a five-year fixed remortgage deal of 3.94% for those borrowing up to 60% of the property value.
From January 4, HSBC’s two-year fixed rate for remortgages will dip below 4.50% for the first time since early June last year.
The headline rate will hit 4.49%, again for those with at least 40% equity in their home.
An HSBC UK spokesperson said: “Our new fixed mortgage rates will see significant cuts across the board which will be a welcomed move.
“Specifically, for customers wishing to remortgage, our rates will start from 3.94% for a five-year deal at 60% LTV [loan-to-value] with a £999 fee.”
First Direct, a division of HSBC, is also set to announce mortgage rate cuts on Friday.
Leeds BS
Leeds Building Society also cut rates on its mortgage deals by up to 0.49 percentage points.
Its cheapest two-year fixed now sits at a rate of 4.6%.
Gen H
Gen H has also announced further rates cut across its entire product range.
The fintech mortgage lender said 85% LTV is reduced by up to 0.67 percentage points.
A two-year standard product with a fee is now 5.32% or a standard five-year at 4.71% with a £999 fee.
And 90% LTV is reduced between 0.40 percentage points and 0.55 percentage points.
While 95% LTV is reduced by 0.60 percentage points, with all five-year rates at sub-5% and two-year products now below 6%.
Gen H was the first lender to introduce -4% rates in December.
The lender also said it is still offering its market-leading 3.94% for 60% LTV five-year homebuying bundle products and 3.99% for 60% LTV five-year standard products.
Santander
Santander told The Sun it has no immediate plans to change rates, but “continually reviews” its products.
Barclays
Several other lenders cut their rates just before Christmas – including Barclays.
It reduced reduced its deals by up to 0.43 percentage points.
Virgin Money
Virgin Money said that it is monitoring the market closely but has no changes to announce at the moment.
Nationwide
Nationwide also said it “regularly reviews rates across our mortgage range to ensure that we continue to offer a competitive range of products”.
Over the last few months, the building society has reduced its mortgage rates 11 times, it said.
It has reduced rates by up to 1.69 percentage points over the last few months.
Skipton
Skipton told The Sun it has no immediate plans to make changes to its mortgage range.
However, it said that “as always” it will continue to look and react to the current market to ensure it’s offering the “best options we can to support our members”.
Metro Bank
Metro Bank also said it continually assesses its mortgage rates.
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Meanwhile, millions of homeowners are set for a boost to their finances as interest rates are set to be cut this year.
Plus, we reveal what will happen to interest rates in 2024 and what it means for your mortgage.
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