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March 3, 2024
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mortgage A terraced row of houses in Bristol, south west England, UK.

Mortgage rates are expected to continue to fall throughout 2024. (Adam Gasson)

Mortgage rates are continuing to fall, providing some relief to UK households and prospective homebuyers, with deals under 4% now available on the market.

The average rate on a two-year fixed deal this week stood at 4.83% while for a five-year deal, rates came down to 4.49%, according to figures from Uswitch.

The big lenders have cut mortgage rates this year as competition between banks heats up and borrowing costs ease.

HSBC and NatWest have both reduced rates this week, with Metro Bank (MTRO.L) and TSB also announcing cuts.

HSBC mortgage rates

First time buyers can get a 4.59% fixed rate deal for two-years at HSBC (HSBA.L) or 4.32% for a five-year deal. Both cases assume a 75% loan to value (LTV) mortgage, meaning buyers need to have at least 25% for a deposit.

NatWest mortgage rates

NatWest (NWG.L) has introduced a two-year fixed-rate switcher deal at 60% loan to value at 3.94%, with a £995 fee, and a five-year purchase fix for customers at 60% LTV, at 3.89%, with a £1,495 fee.

Santander mortgage rates

Santander (BNC.L) has also cut mortgage rates, with deals starting at 3.89% for remortgages. For an 85% LTV five-year fixed rate residential purchase mortgage with a £999 product fee the rate is now 4.39%, down from 4.76%. For first-time buyers looking for a 2-year fix with the lender, the lowest rate starts at 4.71% for a 60% LTV.

Read more: How hard is it to get on the property ladder?

The lender also offers a 90% mortgage – which is becoming rare in the market. For those with a 10% deposit, Santander offers a five-year fixed rate of 4.49%, down from 4.89%.

Skipton mortgage rates

The building society has brought down five-year interest rates by 0.15% to 4.99% on a 90% LTV.

Barclays mortgage rates

Barclays (BARC.L) has cut rates by up to 0.5% and launched a two-year fixed mortgage at 4.17% for anyone with a 60% loan to value, down from 4.62%, with a fee of £899.

Its five-year fixed deal starts at 4.39% for a 60% LTV mortgage.

Nationwide mortgage rates

Nationwide (NBS.L) has reduced rates by 11 times in the past four months but has not announced any new reductions this week. A first-time buyer can get a 5.17% two-year fixed rate deal on an 80% LTV mortgage for a property worth £250,000 according to their mortgage calculator. For a 5-year fix the rate eases to 4.62%.

Halifax mortgage rates

Halifax currently offers a two-year fixed rate up to 60% loan-to-value (LTV) at 4.27%, as well as a two-year fixed rate up to 85% LTV at 4.57%.

Read more: UK mortgage approvals rise as lenders cut rates

The lender also introduced a five-year fixed rate up to 80% LTV at 4.18%, and a five-year fixed rate from 90% to 95% LTV at 5%.

Cheapest mortgage deal on the market

Prospective buyers might be struggling to secure a good deal amid high interest rates and saving up for a deposit. NatWest’s under 4%-deals appear to offer some of the cheapest rates for prospective homeowners, although they require a considerable deposit to secure.

Given that asking prices on newly-listed homes rose in January to £359,748, a 40% equates to almost £150,000.

Will mortgage rates go down in 2024?

Mortgage rates have risen substantially as the Bank of England increased the interest rates to a 15-year high in a bid to tackle inflation.

However, the consensus is that interest rates have peaked and that 2024 will see the Bank of England will begin to cut rates as inflation eases.

The BoE’s interest rate is currently set at 5.25%. Markets are expecting interest rates to fall to 5% by May, 4.75% in June, 4.5% in August and 4% in November.

However, a surprise increase in inflation is forcing market analysts to reprice their bets, with some saying that cuts will only start in August.

If the Bank of England cuts interest rates as expected, mortgage rates will continue to come down throughout 2024.

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

Watch: How much money do I need to buy a house?

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