Major lenders continue to reduce mortgage rates

Mortgage lenders are reducing borrowing rates in a bid to win greater market share.

Barclays yesterday cut the cost of its home loan deals across its fixed rate products aimed at home movers and first-time buyers, with two-deals deals now starting at 3.99%, rivalling Santander’s cuts announced earlier this week for buyers with large deposits.

However, unlike Santander, to be eligible for Barclays’ top deals home buyers will either need to be a Premier Banking customer or they will need to be buying an energy efficient home.

Barclays’ lowest five-year green mortgage rate of 3.99% is available for homes with an energy performance certificate (EPC) of A or B.

The deal comes with a £899 fee – significantly lower than Santander’s £1,999 fee.

For anyone who is not either a Premier banking customer or buying a ‘green home’ the best five-year fix available with Barclays is 4.09%. with a £899 fee.

Alongside Barclays, Nationwide Building Society, Yorkshire Building Society, TSB, BM Solutions, Coventry Building Society and Leeds Building Society have all announced rate cuts.

Yorkshire Building Society’s changes are likely to make the biggest difference to borrowers, with the mutual now offering some of the best deals on the market, with a five-year fix starting at 4.1% with a £995 fee, while its lowest two-year fix is 4.23%.

Another building society to making significant cuts is Leeds Building Society. It is lowering rates by up to 0.74% with deals for both households and buy-to-let landlords.

The bank has made itself most competitive in the three year-fixed rate space offering a market leading 4.53% for those purchasing property with a 20% deposit, albeit with a £1,495 fee. There is also a 4.55% option for those buying with a 15% deposit.

Meanwhile, BM Solutions, part of Lloyds Banking Group, has reduced rates across its buy-to-let products.

Nationwide is cutting selected remortgage rates by up to 0.35% points and selected switcher rates by up to 0.13%.

Chris Sykes, technical director at mortgage broker Private Finance, commented: “At the start of the year when swaps were higher, lenders were issuing loans while hedging against a higher cost of funds.

“Now, they face the challenge of adjusting prices to remain competitive and attract new business – while also retaining existing borrowers who secured higher rates just weeks ago and may seek to switch if lower rates are introduced.

“Lenders must weigh the profits from new loans against potential losses on loans written in the past six months, as borrowers could look to adjust to better rates before completion on their mortgage.”