There is some welcome news for homebuyers as the best 2-Year fixed-rate mortgage deal from a leading lender fell below 5% this week, for the first time since June. Nationwide cut a number of its mortgage rates and took pole position with the cheapest 2-year mortgage deal on the market, giving hope to borrowers that other lenders may follow suit.
Which fixed-rate deals have fallen?
Nationwide Building Society has reduced the interest rate on a number of its mortgage deals, with its current 2-year fixed rate deal offering a 4.99% interest rate charge to borrowers with a deposit that is 40% or more of their property's purchase price. This means that Nationwide's market-leading rate is available on 60% loan-to-value (LTV) purchases only. Buyers with smaller deposits will find slightly higher interest rates with Furness Building Society offering 5.34% if you can contribute a deposit that is at least 20% of your property purchase price. For homebuyers who have a 10% deposit and require a 90% LTV mortgage, Natwest leads with 5.54%.
We regularly update our article, "Best mortgage rates in the UK" where you will find the top mortgage deals for a range of homebuying requirements.
2-year fixed rate deals for 60% loan-to-value mortgages are those that are seeing the highest amount of competition this week. This will be positive news for borrowers who are keen to know that their monthly mortgage payments will not change for the period of their fixed-term deal. While the mortgage market had seen sub-5% 5-year fixed rate deals from some of the larger lenders, it has been around five months since the same has been true for 2-year deals. Some borrowers will be keen to opt for a 2-year fixed rate as opposed to a 5-year one to ensure they can go back to the market in 2 years time and potentially secure a lower rate of interest.
Who will benefit from the current reduction in mortgage rates?
The competition is largely focused on reducing interest rates for homebuyers, potentially due to the reported smaller pool of buyers in the market pushing lenders to stimulate it. The increase in interest rates since September 2022 has made it more difficult for those looking to buy a home due to the extra strain it has put on meeting affordability measures with the increased cost of living shrinking most homebuyers' borrowing power.
Meanwhile, those looking to remortgage over the coming months can also feel positive as we saw the gap close between the lowest interest rates offered on both 2 and 5-Year fixed rates. You can compare mortgage rates and the latest deals using our mortgage rate comparison tool, which allows you to choose whether you wish to purchase a property or remortgage from an existing mortgage deal. You can simply enter your mortgage requirements to see the best mortgage deals.
How to secure the best mortgage deal
If you are looking to either buy a property or remortgage from an existing mortgage deal, you will be keen to secure the best rate based on your specific needs and priorities. The interest rate is one of the more significant parameters of a mortgage when it comes to selecting which lender to approach as well as which type of mortgage product to select, but there are other factors that are important to understand and consider. Current mortgage deals may charge a lender fee that could be anywhere between £50 and £2,000, which would need to be factored into the overall cost of the mortgage deal. On the other hand there are lenders that offer cash incentives that could go some way towards paying for a property valuation or conveyancing fees.
The easiest way to ensure that you have considered your mortgage options carefully is by speaking to a mortgage specialist. Mortgage brokers will have a good understanding of which mortgage offers are best for your needs and often have access to some mortgage deals that lenders only offer through a mortgage broker. You will find that you will not only receive invaluable guidance but you will also widen your search of the market for deals. If you do not have a mortgage broker, you can contact Habito* - one of the first online mortgage broking services. Alternatively, search the professional directory service at VouchedFor* which lists mortgage professionals located near you alongside reviews from customers who have used their services.
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