Mortgage Rates Drop After New Lender Price Cuts

Mortgage rates fell slightly this week after many lenders reduced the cost of their fixed-rate deals. Average two-, three- and five-year fixed rates each dropped by about 3 basis points.

New Average Rates

• Two-year fix: 4.92%
• Three-year fix: 4.84%
• Five-year fix: 4.98%

This also pushed the overall average mortgage rate back below 5%, now at 4.98%.

Biggest Rate Reductions

Some loan-to-value (LTV) brackets saw larger cuts:

• Five-year fixes at 50% LTV fell the most, down 7bps
• Two-year fixes at 50%, 60% and 75% LTV dropped 6bps
• Three-year fixes at 60% and 65% LTV fell 5bps
• Five-year fixes at 90% LTV dropped 4bps, helping those with smaller deposits

Many other mortgage types saw smaller reductions of 1 to 4bps.

Lenders That Cut Rates

Several major banks lowered prices this week, including:

• Virgin Money: up to 33bps
• TSB: up to 15bps
• RBS & NatWest: around 9bps
• Lloyds Bank: 9bps
• Halifax: cuts of 20bps, then another 9bps
• Santander: up to 10bps

Building societies were also very active:

• West Brom: up to 18bps
• Coventry: 25bps
• Leeds: 20bps
• Principality: 13bps
• Nationwide: 25bps
• Melton: up to 20bps
• Furness: up to 9bps
• Family: 15bps
• Newcastle: up to 20bps

Other lenders such as April Mortgages, Clydesdale Bank and LendInvest also made reductions.

Why Rates Are Falling

Only two lenders increased rates this week. Most are cutting prices because fixed-rate mortgages are closely linked to swap rates, which are currently at their lowest levels in around a month.

Even though inflation remains high and the Bank of England held the base rate at 4%, swap rates have given lenders room to reduce fixed-rate deals.

This is good news for anyone coming to the end of a short-term mortgage, as they may see lower monthly payments when they remortgage.