Another big lender, on the other hand, raises borrowing costs
High street lender NatWest has reduced rates on selected residential fixed rate mortgages by up to 41 basis points, reintroducing sub-4% five-year fixed deals.
The move comes after the bank had raised its rates the previous week, with its five-year fixed deal at 60% loan-to-value (LTV) rising from 3.79% to 4.09%.
The lender is now offering a five-year fixed rate deal with a £1,495 fee for home purchases at 3.84%. Its two-year fixed deal is also available at 3.99%, also at 60% LTV.
However, the most significant reduction from NatWest is on its two-year fixed rate deal with a £995 fee for homebuyers at 75% LTV. This rate has dropped by 41bps to 4.19%.
In recent months, major lenders have engaged in a mortgage rate war, sparked by the Bank of England’s first base rate cut since the COVID-19 pandemic. This has driven mortgage rates to some of their lowest levels in months.
Halifax is currently offering a market-leading five-year fixed deal at 3.77% with a £999 fee, while Nationwide has a two-year option at 3.94% with the same fee. Both deals are available at 60% LTV.
But while some lenders are continuing to slash rates, others are recently making increases. Halifax for Intermediaries announced that it would raise the cost of homemover and first-time buyer products, with selected five-year fixes seeing rate increases of up to 8bps.
Recent volatility in mortgage rates has been linked to changes in swap rates, which influence the pricing of fixed rate mortgages.
“Mortgage lenders are naturally taking a more cautious approach, and we should expect a number of them to marginally increase rates in the short term to retain their profit margins, if swap rates continue to rise,” said Gerard Boon, managing director at Boon Brokers.
“However, for now, our brokers have reported that many lenders are still reducing their interest rates following Andrew Bailey’s announcement about likely base rate cuts in the near future.”
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