Mortgage rate reductions put a spring in borrowers steps

The outlook is much brighter thanks to a trio of financial tailwinds. A better-than-expected drop in inflation at the end of 2023, the Bank of England voting against interest rate rises (for now) and an easing of swap rates has led to better value mortgages being offered to borrowers. The latter – swap rates – are particularly important as they are used by lenders to price fixed rate mortgages.  

In the last few weeks, several High Street banks and specialist lenders have cut the rates attached to their products, including Halifax, HSBC UK, First Direct and TSB. Indicative of the movement in the mortgage market is the very latest announcement by Skipton Building Society.   

It has reduced 99 rates across its mortgage product portfolio. Existing customers, new borrowers and those purchasing a shared ownership property will benefit from reductions as much as 0.66%. Even its 100% LTV Track Record tracker mortgage will result in reduced repayments, with the rate dropping 0.13%.  

During the same week in January, other lenders were shouting about mortgages that had sub 4% rates of interest. The Co-Op Bank revealed it was slashing some product rates by 1.07%, with rates as low as 3.89%, while some of HSBC’s remortgaging deals had dipped below 4%, when fixing for 5 or 10 years.   

As well as decreasing rates, there is extra good news when it comes to product choice. Analysis by Moneyfacts revealed 2024 started with the biggest choice of home loans in more than 15 years. The financial information source noted 5,899 mortgage products across all deposit sizes at the start of January 2024. This figure is up from 5,694 at the start of December 2023. Those with 5%, 10% and 40% deposits all have more mortgages to choose from in January 2024, when compared to December 2023.  

In addition, deals are sticking around longer, which gives borrowers more time to lock in. Just a year ago in January 2023, the average lifespan of a mortgage was 15 days before it was pulled by the lender. In July 2023, the picture had declined and a typical mortgage product was available for just 12 days. Now, conditions have improved and a typical mortgage will stick about for 21 days before it is withdrawn.  

And now for the small print. It is essential that new borrowers, those looking to secure additional money to facilitate a property purchase and those remortgaging seek independent financial advice before they plan their next step.  

The new wave of mortgage rates are dependent on the amount borrowed, the deposit/equity supplied (known as the Loan to Value), and type/nature of property that is being considered. A financial expert will also explain any fees attached to the mortgage and will source the best value product for the individual’s circumstances.  

We’re the first port of call when it comes to buying a new home. Contact us and we will help you take advantage of the new, favourable mortgage conditions by putting you in touch with a recommended mortgage adviser.