Mortgage rates sink to lowest level since mini-Budget

view original post

NatWest

NatWest has launched the cheapest five-year mortgage rate on the market since Liz Truss’s mini-Budget two years ago.

The 3.71pc deal requires a 40pc deposit or home equity and comes with a £1,495 product fee.

While the loan is only available to those buying a home, not remortgaging, it will be welcome news for borrowers that rates are continuing to fall.

Rates have not been this low since early September 2022, according to analyst Moneyfacts.

Natwest is offering a five-year fixed deal for 3.77pc and a £995 product fee. The deal is a green mortgage for energy-efficient properties.

Simon Gammon, managing partner at Knight Frank Finance, said: “The mortgage market is hugely competitive, which is why we’ve seen market leading rates fall quite quickly since it became clear that the Bank of England would embark on its cutting cycle.

“The larger banks have been happy to cut margins to the bone to hold on to market share. They will likely seek to rebuild those margins when business levels improve.”

NatWest is not alone in releasing new rates. Major lenders including Halifax, Virgin Money and Leeds Building Society all have new pricing available from Friday. Leeds has made rate cuts of up to 16 basis points to its residential range

Phil Leivesley, director of mortgages at LDN Finance, said: “Small but consistent rate reductions have been the norm for a little while now, but it’s rare to see so many lenders launching lower rates at the same time.

“Different lenders have different funding models, so it’s impossible to attribute these reductions to a single cause, however I suspect a number of lenders haven’t lent as much as they were expecting to at this point in the year, and therefore we can expect the market to be competitive for the remainder of the year.”

In July the Bank of England reduced its bank rate to 5pc after 14 consecutive rises, raising hopes that the move will kick off a downward cycle.

Mortgage holders and first-time buyers have long held out for a reprieve as the current interest rate cycle has caused mayhem in the property market over the past two years.

However, rates are still much higher than two years ago putting pressure on those who need to remortgage.

In September 2022 the average two-year fixed rate was 4.24pc and the average five-year was 4.33pc. At the start of this month the average two-year fix was 5.56pc and the five-year average was 5.20pc.

NatWest’s new rate is only available to homeowners who go directly through the bank and do not use a mortgage broker.

It comes as NatWest was accused of ripping off old customers by offering better rates to new borrowers.

Click here to view this content.

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 3 months with unlimited access to our award-winning website, exclusive app, money-saving offers and more.