Every Friday, we take an overview of the mortgage market with industry insiders and get the best rates from the team at Moneyfactscompare.co.uk.
We saw two lenders launch sub-4% deals this week in a sign that a rates war is heating up.
Santander was the first to make the move, offering a 3.99% rate to buyers and those remortgaging with a 60% LTV ratio. Barclays was quick to follow with a similar deal.
While the cuts are a positive sign in the mortgage market, there was a slight catch – the deals come with large fees.
Santander is charging buyers £1,999 and those remortgaging £1,749, and Barclays slapped on a £899 charge and made it available only to existing current account customers.
David Hollingworth, associate director at L&C Mortgages, said: “Borrowers will therefore need to keep their wits about them and do their sums, to make sure that they are getting the best overall value.
“It will be those with large loans that will have the most to gain from the low rate, whereas those with smaller mortgages are likely to be better served by a lower or no fee and slightly higher interest rate.”
We saw other lenders reduce their rates as they sought to pass on a fall in swap rates and the Bank of England’s base rate cut to customers.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “When big banks make notable cuts, it instils a positive sentiment for more competition into the market, as it can prompt its peers to follow suit with cuts of their own.
“Borrowers looking for a mortgage may have been waiting for rates to fall and need some good news, so there are big expectations for more lenders to compete on price to entice new business in the coming weeks.”
You can find the best mortgage products here, courtesy of Monetfacts…
Moneyfacts also rounds up what it calls “best buys”, which look beyond the lowest rates and takes in incentives and fees.
All of these deals also come with a free valuation…
While this all seems like moves in a positive direction, we did also get the latest mortgage possessions data, which painted a pretty grim picture of the current environment for borrowers.
Mortgage possession proceedings are court actions taken by a lender to recover a property from a borrower who is in arrears.
The Office for National Statistics data showed the number of possessions surged 39% in the final quarter of 2024.
A total of 6,080 claims were made in the last three months of the year, compared to 4,385 in the previous quarter.
Director of mortgage brokers Albion Financial Advice, Dariusz Karpowicz, said the figures were “eye-watering” and show that thousands of homeowners are struggling with high interest rates and soaring living costs.
“These aren’t just statistics, they represent real families watching their dream of homeownership crumble,” he said.
“With repossessions rising during supposed economic growth, and modest increases in landlord possession claims, it’s clear the housing market has become a precarious place for both owners and renters.”
