Borrowers have plenty of reasons to be cheerful with mortgage pricing shifting quickly and positively, as lenders reduce their mortgage rates. After a disappointing 2023 on the lending front, lenders are keen to lend and falling Swap rates, which underpin the pricing of fixed-rate mortgages, are enabling them to offer more attractive deals.

HSBC last week launched a headline-grabbing rate of 3.94 per cent for a five-year fixed rate at 60 per cent loan-to-value for those remortgaging and a two-year fixed rate pegged at 4.49 per cent. No sooner had one lender broken the 4 per cent barrier for a five-year fix, then another came along with The Co-operative Bank has this week launched a 3.84 per cent five-year fix for new purchases or remortgages with a £2,000 fee and minimum loan size of £750,000.

Other lenders have got in on the act with Halifax reducing rates by up to 0.83 percentage points for new customers. NatWest has reduced rates by up to 0.42 and 0.30 percentage points on 2- and 5-year deals respectively while TSB, Clydesdale, Leeds Building Society and Handlesbanken are among many other lenders who have also cut pricing.

Borrowers interested in one of the ‘best buy’ mortgage deals are advised to move quickly as they will be popular and there is no guarantee that they will be around for long. Rates can be booked up to six months before required so it might be worth reserving a deal now for when you need it; if pricing has come down further by then, you can always choose a cheaper deal.

New research from property portal Right move reveals a record number of sellers came to market on Boxing Day, with a 26 per cent increase in new sellers compared with the previous year. This is thought to be down to the growing expectation that base rate has peaked at 5.25 per cent after three consecutive votes to hold rates, and that the next move will be downwards. This has increased buyer and seller confidence, enabling borrowers to plan ahead with more certainty in terms of what they are able to afford and willing to pay.

Certainly, house prices seem to be proving resilient with Halifax reporting that average prices rose by 1.1 per cent in December, the third monthly rise in a row. The price crash that many predicted did not materialise, with property prices finishing the year 1.7 per cent higher than at the start of 2023, mainly down to lack of stock, which has supported values. With property transactions decreasing again in November to 80,780 from 81,770 in October, according to HMRC, the market is quieter but, unlike many had forecast, people are still buying and selling. With Bank of England figures showing that mortgage approvals, an indicator of future borrowing, increased by 4.6 per cent in November, all signs are pointing to a busier 2024 for the housing market.

Although we are in a higher interest rate environment and will have to get used to paying more for our mortgages, these latest price reductions will make rates more palatable. While fixed-rate mortgages are becoming more attractive, those borrowers who feel rates may come down further and want more flexibility may wish to consider a variable-rate mortgage with no early repayment charges with a view to moving onto a fixed rate should pricing eases further. However, if you need certainty to help with budgeting, a variable rate may not be suitable.

With so much continued uncertainty, it is important to seek advice. AWS Private Finance is a whole-of-market broker who will look for the best mortgage for your circumstances, comparing all the products on the market. Please get in touch for more information.

Best buy remortgage rates (all at 60% loan-to-value)
Rate Type
4.44% two-year fix
4.49% three-year fix
3.91% five-year fix
3.99% 10-year fix

Source: Moneyfacts