Barclays, Tesco and Atom slash mortgage rates for new borrowers
MORTGAGE borrowers and first-time buyers looking to bag a deal may find that now is a good time to do it as seven major lenders have cut rates this month.
NatWest and RBS, which are both part of the RBS Group, have cut rates by the largest average amount at up to 0.5 per cent for new borrowers and remortgagers, according to data from financial comparison site Moneyfacts.
Next up is Atom Bank with cuts of up to 0.37 per cent, followed by Accord Mortgages with reductions of up to 0.27 per cent, and Furness Building Society with cuts of up to 0.15 per cent.
Meanwhile, Clydesdale Bank and HSBC have both cut rates by up to 0.1 per cent.
Tesco Bank says it has also either cut or held rates across all of its remortgage and new borrower deals by up to 0.31 per cent.
Over the past week, the average two-year fixed rate across the whole market has fallen from 2.523 per cent to 2.514 per cent as a result of the cuts.
How to find the best mortgage
FINDING the right mortgage is all about your individual circumstances. Here's some advice on what you should keep in mind:
- Decide what kind of mortgage you want: a fixed deal means you'll know exactly what your mortgage will cost, but if interest rates fall, you won’t see your payments drop. A variable deal means your costs will fluctuate, but only because of economic changes, rather than decisions by the lender.
- Shop around: there are big differences between mortgage deals, so make sure you compare costs. Also check whether there are any cashbacks or other offers. Here websites such as Moneysupermarket and Moneyfacts may come in handy.
- Calculate your total costs: look beyond the headline interest rate and take into account all the fees you have to pay, such as arrangement fees, mortgage valuation fees and insurance fees.
- Consult a mortgage broker: if the flurry of options are confusing, a mortgage broker can help you find a deal that best suits your personal circumstances. Just make sure that you use an independent company or adviser.
Moneyfacts says the price war is hotting up as lenders desperately try to clinch new borrowers or keep hold of existing ones.
Its mortgage expert, Darren Cook, said: "Mortgage providers currently have a limited amount of business to compete for and recent activity in the fixed rate sector demonstrates that competition is rife.
"It was evident that mortgage providers generally left mortgage their ranges unchanged during the second half of December, but it seems that some have been quick out the stalls early in January to make sure that they have a competitive rate advantage.
"This is excellent news for borrowers, especially first time buyers who are wishing to take their first step onto property ladder as Moneyfacts has seen the biggest cuts take place at higher loan-to-values over recent months."
Of course, just because a lender has cut its rates doesn't mean it's going to be the best deal for you - you should always compare the overall cost of the mortgage by taking into account both the interest rate and any fees.
You should also check what the lender's standard variable rate (SVR) is and make a note to switch a fixed or tracker deal when it comes to an end.
More on mortgages
Here's how to apply for a mortgage and boost your chances of getting accepted.
Plus, how to find the best mortgage if you’re a first-time buyer.
And if you've already got a mortgage, here's why paying £25 extra a month will get you mortgage free a year earlier.
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