Mortgage burden to ease for many after big banks make ‘very significant' cuts to rates
9 January 2024, 14:33
Two of the UK’s biggest mortgage lenders have announced ‘very significant’ mortgage cuts, to take effect from Wednesday.
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Barclays and Santander will be lowering rates across a number of their products, including mortgages, the high street banks have revealed.
This comes as HSBC slashed their five-year fixed rate to below 4%, while Halifax cut some interest rates by almost one percentage point last week.
Barclays has also announced a ‘significant move’ by focusing on customers with a two-year fixed rate and announcing cuts of up to 0.5%.
From tomorrow, Barclays customers on a two-year fixed mortgage with a 60% loan to value (LTV) will see rates drop from 4.62% to 4.17%.
Customers with 75% LTV mortgages see the rate lowered by half a percentage point from 4.7 % to 4.2%, while those with a 95% LTV will see the rate drop from 5.8% to 5.5%.
Spanish-owned bank Santander has revealed that it will be lowering mortgage rates to below 4%, to help ease the burden on homeowners by focusing on new customers.
In a bid to entice new customers, the bank will be sweetening the deal with cuts of up to 0.82%, the bank has announced.
The deal means that 60% LTV five-year fixed rate mortgages will be available at 3.94% for new customers, but the same deal will also mean a rate 3.89% for customers looking to remortgage.
Cuts will also focus on new builds with exclusive fixed rated reduced by up to 0.5%, large loans fixed rates slashed by 0.25%, buy-to-let mortgages with five-year fixed rates will see a decrease of up 0.56%.
Graham Sellar, head of business development, mortgages at Santander, told Sky News: "We are delighted to help borrowers access cheaper loans with major reductions across our fixed mortgage rates."
The move was hailed as a boost for people looking to secure or renew their mortgage.
Gareth Davies, director at South Coast Mortgage Services, said: "This is a very significant move by Barclays. The best one we've seen in 2024 yet.
"To see two-year fixed deals edging this much closer to 4% is not something many would have predicted a few months ago.
"With their capacity to handle large business volumes, too, this is a serious shift in the market and other lenders are going to lose a lot of business to them unless they also fall in line."
It comes after it was claimed that the residential mortgage market started 2024 with the biggest choice of products in more than 15 years.
Financial information site Moneyfacts counted 5,899 homeowner mortgage products across all deposit sizes at the start of January 2024, up from 5,694 at the start of December 2023.
Rachel Springall, a finance expert at Moneyfacts, said: "Those comparing different mortgage offers may be pleased to see a big uplift in choice, as there was a rise of 200 residential mortgages month-on-month.
"This was the biggest rise month-on-month in product choice since September 2023, which was an extremely busy period for lenders, when repricing was rife, and the average shelf life of a deal was just 15 days.
"A rise in choice and cheaper mortgage rates are promising signs for those looking to refinance this year."
