Two major lenders slash mortgage rates just in ‘dose of Christmas cheer’ for borrowers
TWO major lenders have cut mortgage rates just in time for Christmas.
NatWest and Coventry Building Society have both announced the reductions in recent days.
According to Moneyfacts, interest on the average two-year fixed mortgage rate fell below the 5.5% mark once again, having sat at 5.4% in early November.
On Friday, interest on the typical two-year fix was at 5.4894%, against 5.5197% a week ago.
That same day, NatWest cut its two and five-year fixed-rate mortgage products by up to 0.39%.
Home buyers, households remortgaging and buy-to-let landlords are all set to benefit.
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Almost all of NatWest's changes will be within the 4 to 5% range with its lowest five-year fix starting from a market-leading 4.1% from tomorrow.
Coventry Building Society also announced on Friday that rates on all of its fixed-rate mortgages would be reduced, including cuts of as much as 0.26% on residential deals.
The move has been branded a "dose of Christmas cheer" by experts.
Iain Swatton, Director at Exemplar Financial Services said: "Following NatWest and other lenders over the past week, Coventry has now joined the festive rate-cut trend.
"They're healthy cuts too. It’s a dose of Christmas cheer for borrowers, offering hope for a strong finish to 2024 and renewed confidence in the market heading into 2025."
It comes after mortgage rates have been on the rise since early October with the lowest rates rising by close to 0.5 percentage points since then.
What's next for mortgage rates?
The Bank of England (BoE)'s governor Andrew Bailey said this week there could be as many as four interest rate cuts in 2025 which would see them increase.
In the BoE's most recent Monetary Policy Committee (MPC) meeting, rate-setters reduced the base rate from 5% to 4.75%.
This move immediately benefitted thousands of mortgage customers with Halifax, Lloyds Bank, and Metro Bank, cutting rates.
The base rate is used by lenders to determine the interest rates offered to customers on savings and borrowing costs including mortgages.
With the MPC meeting again next week on December 18, hopes are that rates will continue to fall.
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, said: "The Boxing Day sales have started already, with three major lenders reducing rates.
"While not the biggest reduction we have ever seen, they are certain to attract last-minute applications from those that were previously waiting to see what happens. There really is no time like the present in the current market."
David Stirling Independent Financial Advisor at Mint Mortgages & Protection said: "Coventry have started their Christmas sales early and are offering borrowers some real bargains.
"This is a strong statement from Coventry and, following cuts from other major lenders this week, optimism is growing that rates are trending downwards again.
"This should continue into 2025 now, offering those looking to fix more competition and less financial pain."
Others have said that NatWest and Coventry's reductions show that the market is starting to stabilise following the Budget.
Rohit Kohli, Director at The Mortgage Stop explained: "Coventry’s festive rate cuts are a welcome gift for borrowers, especially as we head into the holiday season.
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"It’s a positive sign that the market is starting to stabilise post-Budget, and these reductions will bring much-needed cheer to those looking to secure a deal before Christmas."
He added that he hopes the trend isn’t just a "seasonal special" but continues into the New Year.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you're remortgaging and your loan-to-value ratio (LTV) has changed, you'll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home's value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you're nearing the end of a fixed deal soon it's worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal - but compare the costs first.
To find the best deal use a to see what's available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You'll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee - sometimes more than £1,000 - to the cost of the mortgage, but be aware that means you'll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you'll have to pass the lender's strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month's payslips, passports and bank statements.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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