Mortgage rates cut again as Santander and Barclays latest to join price war

Santander and Barclays are the latest lenders to cut their mortgage rates as they follow similar moves in a “price war”.

Halifax, Nationwide and The Mortgage Lender have also reduced rates for borrowers.

In a bid to attract customers, Santander’s rates fell by 0.2 per cent across its product range while deals for new customers dropped by 0.12 per cent on fixed rates and 0.15 per cent on selected tracker products.

Trackers follow the Bank of England’s base rate and plus or minus a specific percentage.

The current base rate is 3.5 per cent but the figure is expected to rise to four per cent when the Monetary Policy Committee meets in February.

An increase would result in a surge in mortgage costs for those on a tracker product, despite them being more inexpensive on average than current market fixed rates.

Barclays have also followed suit by reducing rates, with a five-year fixed rate deal for those with a 25 per cent deposit at 4.41 per cent.

In addition, a two-year tracker deal for borrowers with a 25 per cent deposit is on offer at 3.86 per cent – down from 3.99 per cent.

Mortgage rates are slowly falling in comparison to last year following uncertain economic conditions in the UK after the mini budget in September.

According to MoneyFacts, interest rates on the average five-year fixed mortgage has dropped below to 5.27 per cent as more lenders continue to reduce rates.

The best deal is now a five-year fixed rate of 4.18 per cent for borrowers with larger deposits.

David Hollingworth from mortgage broker L&C told The Mirror: “The pace of change in mortgage rates has picked up but in contrast to last year we are now seeing rates cut, as the price war intensifies.

“More stable and cheaper funding conditions are enabling lenders to improve rates and reverse some of the huge hikes that followed the mini-Budget.

“Competition between lenders is likely to be fierce as they want to lend and will therefore need to offer attractive products. I expect that we will see the fixed rate cuts continue despite the potential for another base rate increase next week.”