HOUSE THAT
Barclays, Natwest and TSB cut mortgage rates but interest costs creep up
Have you got a money story to share? We'd love to hear from you please email: [email protected]
A GROWING number of high-street lenders are cutting the price of their mortgage deals.
Barclays, TSB, Natwest and Coventry Building Society have all announced reductions to their mortgage rates.
1
Late last week, NatWest cut its two and five-year fixed-rate mortgage products by up to 0.39%.
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 today, Monday December 9.
Coventry Building Society also announced that rates on all of its fixed-rate mortgages would be reduced, including cuts of as much as 0.26% on residential deals.
This was quickly followed by Barclays, which said from Tuesday, December 10 it will cut its residential purchase and remortgage five-year fixed rates by up to 0.14%.
read more on money
For example, its five-year fee-free deal at 60% loan to value (LTV) will fall from 4.34% to 4.20%.
Meanwhile, its five-year fixed £899 deal will fall from 4.18% to 4.11%.
Mark Arnold, head of mortgage and savings at Barclays, said that itroducing these new rates will benefit customers and "may help to ease the financial burden involved in buying and moving house.”
And Mark Posniak, managing director at Maslow Capital, said Barclays' latest rate cuts are a "step in the right direction" - but he cautioned that it may not be enough for struggling homeowners.
Most read in Money
He explained: "While the move may provide some relief, it falls short of the meaningful changes needed to address broader affordability challenges and stimulate real growth in the property market.
On the same day, fellow lender TSB will also cut the rates of three-year fixed first-time buyer mortgages by up to 0.22%.
It will also cut its five-year fixed first-time buyer and home mover at 90% LTV, by up to 0.15%
A TSB spokesperson told The Sun that these changes "reflect TSB’s commitment to providing competitive options for homebuyers, homeowners looking to remortgage, and customers seeking additional borrowing.”
The Sun's James Flanders explains how to find the best deal on your mortgage
MORTGAGE RATES ON THE RISE
The latest cuts come as as many prospective homeowners are still facing barriers to entry due to comparatively high mortgage costs and rising house prices.
Figures released by data firm Moneyfacts this month show that the average fixed mortgage felt its biggest monthly rise since August 2023.
Average mortgage rates on the overall two- and five-year fixed rates rose by 0.13% and 0.19% to 5.52% and 5.28% respectively.
It was the biggest monthly rise to the five-year fixed average rate since last summer.
Rachel Springall, finance expert at Moneyfacts, said this was because lenders rushed to re-price products due to "volatile swap rates".
Swap rates are interest rates that banks and other lenders exchange to secure funding for a set period of time.
They are usually based on what the market thinks interest rates will be in the future.
The Bank of England recently reduced the base interest rate to 4.75%, a quarter-point cut, marking the second time interest rates have been cut this year.
But other external factors such as the war in Ukraine and inflation can also have an impact on the rate.
Ms Springall told The Sun that lenders have not been repricing their deals as aggressively as they did in the weeks leading up to the Budget in October.
She added: "Despite the drop to the Bank of England base rate last month, fixed mortgage rates overall are higher than they were a month ago due to volatile swap rates.
READ MORE SUN STORIES
“It will be good news for borrowers if more prominent lenders cut their mortgage rates, but they will have to be by significant margins to make a big impact.”
Different types of mortgages
We break down all you need to know about mortgages and what categories they fall into.
A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.
Your monthly repayments would remain the same for the whole deal period.
There are a few different types of variable mortgages and, as the name suggests, the rates can change.
A tracker mortgage sets your rate a certain percentage above or below an external benchmark.
This is usually the Bank of England base rate or a bank may have its figure.
If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.
A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.
SVRs are generally higher than other types of mortgage, so if you're on one then you're likely to be paying more than you need to.
Variable rate mortgages often don't have exit fees while a fixed rate could do.
Topics