The lender today unveiled new prices which included a remortgage deal for 4.98% with a £999 fee for customers with 40% equity in their home.
It is also offering a rate of 4.8% with an £899 fee for customers buying a home with at least a 40% deposit. All its new prices will apply from tomorrow (Friday 17 November).
These deals come hot on the heels of Nationwide, Halifax and HSBC’s sub-5% offerings announced in the last week. And today Moneyfacts.co.uk revealed there were now 27 lenders offering ‘sub-5%’ fixed mortgages. This compares to 13 at the start of October.
Experts said the fact there were now more two-year fixed rates on offer for customer wishing to lock into a price for just two years was good news for borrowers looking for a bit more flexibility.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It’s encouraging to see cheaper mortgages on the market for borrowers, particularly the return of two-year fixed mortgages priced below 5%.
“This is great news for those who do not want to commit to a longer-term fixed deal. Several large lenders have slashed fixed mortgage rates and there is much anticipation for more cuts in the coming weeks.
“As we head ever closer to the year-end, lenders will be weighing up both the current competition and their own lending targets, so it’s a promising market for consumers looking for a new deal.”
Restrictions to new rates: What to look out for
Anyone due to apply for a mortgage in the next few weeks or months is urged, however, to speak to a broker or mortgage adviser who will help them to navigate all their options.
For whilst these headline rates look appealing, the sub-5% deals are mostly for borrowers with high deposits or equity.
Laura Bairstow, founder at The Mortgage Masters, speaking via the Newspage agency said: “It’s great to see rates under 5% for two-year fixes. However, they’re only accessible on purchases for buyers who have a minimum 25% deposit.
“Very few first-time buyers will benefit here and that’s what we really need to inject life into the housing market. However, this is certainly another step in the right direction so let’s hope more lenders follow suit.”
Meanwhile, Craig Fish, director at Lodestone Mortgages & Protection, also speaking via Newspage added: “That’s it, the rate war is well and truly underway now, and more lenders are likely to follow.
“There is a real chance that we could see a sub 4% five-year fix this side of Christmas, and a two-year below 4.5% also. Swap rates have tumbled this week, and lenders are now going to be slogging it out until the year-end.”
If you are looking at your mortgage options right now, Rachel Springall added the following advice. “As always,” she said, “it is imperative borrowers assess the overall true cost of any mortgage deal instead of assuming the lowest rates are the best choice, as some of the lowest priced deals carry high fees or few incentives.
“Seeking independent advice to weigh up all the options is wise, especially if borrowers have limited upfront cash to pay for any product fees or legal costs.”
