DELUGE OF DEALS
Buyers urged to ‘act quickly’ as another major bank launches sub-4% mortgage deal
Scroll to see the lenders cutting rates
BORROWERS have more choice for cheaper mortgages after another major lender has trimmed rates below 4%.
TSB is now offering fixed rates as low as 3.99%, joining the likes of Barclays, Nationwide and HSBC.
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The cuts are good news for buyers making it easier and more affordable to buy a home.
You'll need to have a large deposit of at least 40% to get deals below 4%.
And many of these cheapest deals come with further catches that mean not all borrowers will be able to get them.
TSB latest rate reductions sees the lender now offering a two-year fixed rate of 3.99% for customers with a deposit of at least 40% (60% loan to value).
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The deal is only available to existing TSB customers coming to the end of a deal and looking to make a switch on to a new mortgage.
It comes after Nationwide launched a sub 4% mortgage on Friday, and Barclays followed suit on Tuesday.
Nationwide's new deals are, again, for existing customers looking to move to a new deal or new customers who are remortgaging.
Barclays is offering five-year fixed rates as low as 3.96%.
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But the deals are limited to borrowers who are buying an energy-efficient new-build home directly from the builder or developer.
Rachel Springall from comparison site Moneyfactscompare.co.uk, said: “Borrowers hoping for mortgage rate cuts to dominate this Spring will be pleased to see such prominent lenders reducing fixed rates in their range.
"A headline grabbing rate is exciting, but it is essential for borrowers to assess the whole package of any deal before they commit.
"Some deals are also exclusive to certain customers, so it’s wise for borrowers to seek independent advice to navigate all the options available help them save them time and hassle.”
Expert said rates could fall further over the coming months but warned that the pace of reductions is set to slow.
Nicholas Mendes from broker John Charcol said "While further reductions are possible, the pace of cuts is likely to slow, in my opinion, as lenders tread a fine line between being competitive and profitable.
"By the end of the year, the best 60% LTV two-year fixes could settle around 3.5%, with five-year deals around 3.6%."
However, mortgage rates will heavily depend on what happens with the Bank of England base rate.
Monetary policymakers have been trimming the base rate in recent month as inflation has fallen.
However, this could all change if the cost of living shoots back up.
Nicholas Mendes said buyers wanting to access a low rate deal should move fast.
He added: "It's important for borrowers to act quickly and continually review as any market leading deals will be taken up quickly meaning lenders have to adjust at short or limited notice."
Which lenders are offering sub 4% mortgages?
More lenders are offering fixed mortgage rates below 4%. However, they often come with a few catches.
- HSBC has launched a five-year fixed rate at 3.98%. The deal is only available to Premier customers who either earn at least £100,000 and have it paid into an HSBC Premier Bank Account or hold £100,000 or more in savings or investments with HSBC UK.
- Barclays has a five-year fixed rate at 3.96% through its Green Home mortgage. Borrowers must be buying an energy-efficient new-build home directly from the builder or developer.
- Lloyds Bank has two and five year rates of 3.99%, but again these are only open to Club Lloyds customers.
- Dankse Bank is offering two and five-year fixed rates from 3.99%.
- Nationwide is offering rates as low as 3.99% for remortgaging customers.
David Hollingworth from broker L&C said: "The base rate is expected to continue its descent through the course of this year, which should bolster confidence even if the reductions may be relatively gradual.
"It should also help to see more gradual improvement in mortgage rates over time, although there is of course still the uncertainty that global events could bring."
Should I fix my mortgage?
With mortgage rates quickly changing, it can be difficult to decide the best course of action.
One of the biggest benefits of a fixed rate mortgage is that you know exactly how much your repayments will be over the duration of the term.
This makes budgeting easier and provides peace of mind, particularly if you are concerned about potential interest rate increases in the future.
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However, if the base rate falls further, you won't see any benefit until the mortgage term finishes.
An independent mortgage broker can help talk you through your options. You can find well rated advisers through unbiased.co.uk.
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.
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