Banking change means homeowners can save around £300 a year | Personal Finance | Finance
HSBC has joined Barclays and the TSB in announcing wholesale reductions in the cost of new mortgages.
The cuts follow reductions by other lenders last week in what is boiling up to be a full-on price battle to win new customers.
Lenders are typically cutting rates on new loans by up to 0.25 of a percentage point. This equates to a saving of around £25 a month – £300 a year – on a £200,000 home loan.
The reductions for both home buyers and buy-to-let landlords will fuel a rise in inquiries from buyers with estate agents already reporting a surge in people coming through the door.
Significantly, many of the new cheaper deals will be available to first-time buyers with small deposits of 10-20 percent.
New deals from Barclays include a two-year fixed rate at 85 percent loan to value (LTV) with a £999 fee, which has been cut from 5.22 percent to 5.07 per cent. A fee-free alternative has been reduced from 5.43 percent to 5.28 percent.
Its five-year fixed rate option with a £999 fee has been lowered from 4.94 percent to 4.79 percent, while the fee-free deal has been cut from 5.03 percent to 4.88 percent.
HSBC will put a figure on the scale of the reductions tomorrow, while TSB is cutting the headline rate on a number of home loans by 0.25 of a percentage point.
Michelle Lawson, Director at Lawson Financial, said: “The weather may be dismal but the sun is starting to shine on the mortgage market.
“Confidence is definitely returning among consumers more and more of whom are now moving and remortgaging.”
Justin Moy, Managing Director at EHF Mortgages, told Newspage: “Lenders seem to be putting their towels out on the loungers by the pool, ensuring they feature in the latest round of rate cuts and keep tabs on the competition. Higher loan-to-value borrowers will be delighted to see their rates improved.”
Hannah Bashford, Director at Model Financial Solutions, heralded the repeated cuts announced in recent days.
She said: “What. A. Day. If this isn’t a positive sign on where interest rates are going, I don’t know what is.
“It’s now more important than ever to look at the whole of the market and make sure, if you’re purchasing or remortgaging, that you are tracking rates.
“I have made four changes to one client’s mortgage application in the past six weeks alone and if you go direct a lender is simply not going to tell you of these changes or encourage you to adjust your rate.”
Craig Fish, Director at Lodestone Mortgages & Protection, said: “The race to end 2024 as the lender who has lent the most is on, and the competition is only set to become more intense.
“All good signs for those looking to obtain a mortgage with affordability continually improving.”
Ranald Mitchell, Director at Charwin Mortgages, said: “With lenders battling it out, borrowers and the property market are set to benefit from this relentless momentum. The race is on, and it’s shaping up to be an exciting end to the year for anyone looking to secure a great mortgage deal.”
