Several lenders have cut their mortgage rates as we return from the festive holiday and mortgage activity regains momentum. Both HSBC and Halifax have announced cuts to mortgage rates across multiple deals, while Leeds Building Society, Gen H and First Direct took leading positions in our mortgage best buy tables with their new rates. The reduced rates are a continuation of the fall we have been seeing in the mortgage market for several months, though some lenders have reduced rates by greater margins than previously observed. This, alongside announcements of an increase in successful mortgage applications, should provide some positive news for those looking to buy a property or whose mortgage deals are coming to an end.
Which lenders have reduced mortgage rates?
Halifax, HSBC, Leeds Building Society and Gen H (Generation Home) are among those that have cut mortgage rates. Gen H launched a sub-4%, 5-year fixed-rate mortgage deal during the last week of 2023 while HSBC launched a similar deal for remortgaging customers on the 4th of January. Several other lenders including TSB, First Direct and NatWest are expected to follow suit and mortgage brokers have commented that several deals have been pulled to be repriced by other lenders.
Mortgage customers will be encouraged by the downward trend of mortgage interest rates since they reached peaks that averaged over 6% in the summer of 2023.
While some lenders are merely trying to keep pace with rates that had already fallen at the end of last year, others are showing clear signs that competition is heating up, which will benefit mortgage customers across the board. Unlike mortgage rate reductions that were largely aimed at homebuyers with 40% or more as a deposit on their purchase, this last set of mortgage rate changes has seen improved rates launched for many types of homebuyer, with up to 95% loan-to-value mortgage deals now available at an interest rate of under 5%. Borrowers with larger deposits could even secure sub-4% mortgage deals in some cases.
You can search specific mortgage deals based on your financial needs using our Mortgage rate comparison tool as more new rates are expected to be announced over the coming days.
You can also keep track of mortgage rates in our articles, "Best mortgage rates in the UK" and "Best fixed-rate mortgage deals in the UK", which we update regularly.
Mortgage Market Outlook in 2024
The Monetary Policy Committee (MPS) voted to keep the Bank of England (BoE) base rate at 5.25% at each of the last 3 rate reviews, but many economists predict that the MPS will likely vote to cut the base rate at the next review. Some experts are even predicting a series of cuts to the BoE base rate in light of positive changes in inflation, and lenders reflect this in the rates they are now offering. The BoE base rate influences the cost of borrowing for lenders through swap rates and as this reduces, mortgage borrowers can expect to see a downward trend in mortgage rates.
Many mortgage specialists have commented that lenders look set to continue reviewing mortgage rates in a bid to find positions in 'Best Buy' tables, but some have predicted that the current level of activity is likely to slow down over the coming weeks and months.
What to do if you are looking for a new mortgage or remortgaging
The flurry of mortgage competition will be an encouraging scene for those looking to take on a new mortgage loan or simply renew an existing one. However, while it may look like the trend for mortgage rates is on a downward trajectory, borrowers should be mindful that offers will only be accepted based on meeting a lender's qualifying criteria. Some households will have seen an increase in their cost of living, making affordability checks more difficult to pass. Finding the right lender to match your circumstances in these cases is vitally important.
Remortgaging with your existing lender can be tempting to avoid more in-depth financial checks but it is wise to check if better rates are on offer that could be secured just as easily by switching lenders. A mortgage broker* can usually guide you to the best outcome without the need to apply, helping you avoid declined mortgage applications which can adversely affect your credit score.
Furthermore, borrowers holding out for further falls to rates may wish to get some assurances in place while they do this - especially those who are coming up to the end of their existing mortgage deal. You can start your remortgaging process up to 6 months before your current mortgage deal ends. You will find more information about this in our article "How to remortgage and get the best rate".
Speaking to a mortgage expert* could provide you with the guidance that you need to secure the best mortgage deal based on your needs. Mortgage brokers often have better insights into which rates are better overall and can access lenders' deals that are available through an intermediary but not directly by borrowers. You can also enquire about securing current mortgage rates while remaining open to more favourable options if you are in a position to delay.
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