09 January 2024 , 13:02
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The mortgage price war is heating up, with more than 30 lenders having announced cuts to borrowing costs since the start of the New Year.
Barclays and Santander are the latest high street names to have confirmed reductions to their home loan products. Barclays is applying cuts of up to 0.5 percentage points from tomorrow to two-year fixed deals, while Santander is reducing fixed rate mortgages by up to 0.82 percentage points for new customers.
It comes after Halifax and HSBC announced rate reductions last week. Halifax cut the interest on a two-year fixed deal by up to 0.83 percentage points, while its product transfer range has had rates reduced by 0.92 percentage point.
HSBC has reduced rates on its residential mortgage range by up to 1 percentage point. Moneyfacts says the average two-year fixed residential mortgage rate today is 5.76%, while the rate is 5.37% for a five-year fix. But some lenders are now offering rates below 4% for the first time in more than six months.
But the current market leader is Co-op Bank, where customers will be able to secure two-year fixed rates starting from 3.84% and five-year fixed rates from 3.74%. Mortgage borrowing costs are coming down because market analysts are expecting the Bank of England to finally start cutting its base rate this year. The base rate is at 5.25% and has been held at this level for the last three meetings of the Monetary Policy Committee.
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Approximately 1.6 million fixed-rate mortgage deals are due to expire in 2024, meaning these households face higher monthly costs compared to what they're paying now. If you're due to remortgage, you can normally lock in a new deal up to six months before the end of your current one.
Be sure to check if you'd lose any fees if you decide to ditch your deal later on, should something cheaper come along. Martin Lewis' MoneySavingExpert.com recommends considering what is most important for you, when picking the length of your mortgage term.
For example, if you value price certainty and want to know exactly how much you'll be paying for a set period of time, then you may want to consider fixing for longer. The downside to this is, it is impossible to know if mortgage rates may come down further over time.
Lowest mortgage rates right now
These are the lowest rates but may not be cheapest overall, when taken into account fees and length of time paying interest.
- Co-op Bank - 3.84%
- HSBC - 3.91%
- First Direct - 3.99%
- MPowered Mortgage - 4.13%
- Bank of Ireland UK - 4.19%
Best buy mortgages right now
The following list was compiled by Moneyfacts and takes into account "true costs" including upfront fees and length of time repaying.
Two-year fixed rate mortgages
- Co-op Bank - 4.34% (max LTV 80% and £999 fee)
Co-op Bank - 4.35% (max LTV 85% and £999 fee)
First Direct - 4.54% (max LTV 60% and £490 fee)
First Direct - 4.69% (max LTV 75% and £490 fee)
Co-op Bank - 4.80% (max LTV 90% and £999 fee)
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Leeds Building Society - 4.81% (max LTV 75% and no fee)
Three-year fixed rate mortgages
- Co-op Bank - 4.33% (max LTV 80% and £999 fee)
- Co-op Bank - 4.34% (max LTV 85% and £999 fee)
Co-op Bank - 4.36% (max LTV 90% and £999 fee)
First Direct - 4.54% (max LTV 60% and £490 fee)
Generation Home - 4.59% (max LTV 75% and £999 fee)
Generation Home - 4.69% (max LTV 75% and no fee)
Five-year and over fixed rate mortgages
- Co-op Bank - 3.89% (max LTV 60% and £999 fee)
- Co-op Bank - 3.92% (max LTV 75% and £999 fee)
- Co-op Bank - 4.00% (max LTV 85% and £999 fee)
Co-op Bank - 4.02% (max LTV 90% and £999 fee)
Nationwide - 4.84% (max LTV 85% and £999 fee)
Nationwide - 5.20% (max LTV 90% and £999 fee)