Two Major Mortgage Lenders Announce ‘Very Significant’ Rate Cuts
Barclays and Santander have made headlines with their recent announcements of substantial mortgage rate reductions. These rate cuts are being hailed as a turning point for UK households grappling with escalating bills. The move follows similar actions by HSBC and Halifax in the previous week.
Barclays revealed that they are reducing rates by up to 0.5%, introducing a two-year fixed mortgage at 4.17% for individuals with a 60% loan to value. This rate, down from 4.62%, comes with a fee of £899. On the other hand, Santander is set to implement rate cuts, bringing some mortgage deals below the 4% mark.
David Hollingworth from L&C mortgage brokers expressed optimism, stating, ‘It is definitely a turning point. Compared to last summer, we have witnessed a significant drop in rates, which is excellent news for buyers.’
The reductions by Barclays, HSBC, Halifax, and Santander are expected to benefit various loan to value ratios, with rates for 75% LTVs dropping from 4.7% to 4.2% and 95% mortgages seeing a decrease from 5.8% to 5.5%. Santander’s offerings include a five-year fixed-rate loan at 3.89% for remortgaging and 3.94% for first-time buyers with a 40% deposit.
Furthermore, Santander is reducing rates for new customers across different mortgage categories, with large loan fixed rates decreasing by 0.25% and buy-to-let rates also experiencing a drop.
The Bank of England’s recent report highlighted that interest rates on mortgages, loans, and savings had reached their highest levels in years, with the UK’s base interest rate having been raised 14 times over the past two years.
Industry experts are optimistic about the future, with expectations of further price reductions for consumers. Danny Belton, head of lending at Mortgage Advice Bureau, emphasized that the decline in mortgage rates is attributed to falling swap rates, leading to cost reductions for lenders and subsequently, price reductions for customers.
Looking ahead, there is anticipation for a potential base rate cut by May, provided that current conditions continue to improve. This positive trend is seen as a boon for homeowners looking to remortgage or purchase property in 2024.
Gareth Davies, director at South Coast Mortgage Services, lauded Barclays’ move as a significant development, underscoring the unexpected nature of the rate adjustments.
Adrian MacDiarmid, head of mortgage lender relations at Barratt Developments, foresees more lenders following suit, which could open up opportunities for prospective buyers, potentially making homeownership more accessible.
In conclusion, the recent rate cuts by major lenders signal a positive shift in the mortgage market, offering hope to consumers and paving the way for a more affordable borrowing landscape.
