Virgin, Nationwide and HSBC are also among the lenders who have been reducing rates as the mortgage price war continues.
The latest data from Moneyfacts shows the average two-year fixed rate is today (Tuesday 17 September) 5.48% compared to 5.53% a week ago.
Meanwhile, the average five-year fix has tumbled from 5.18% to 5.14% in one week.
The data comes just days after Santander announced it had become the first lender to reduce one of its two-year mortgage rates to below 4%.
Up until now, the only ‘sub-4%’ mortgages were five-year deals. So Santander’s two-year fix with a rate of 3.99% is being described as a ‘landmark moment’ for borrowers. The deal in question is for property buyers with at least 40% equity and it comes with a £999 fee – but it is expected more lenders will follow and hopefully more borrowers will eventually benefit.
Justin Moy, managing director at EHF Mortgages, speaking via the Newspage agency, said: “This launch of a sub-4% two-year fixed rate is a landmark moment.
“Aggressive pricing will only intensify competition in the High Street over the coming months as they all scramble for market share.
“Most lenders have struggled to meet challenging targets this year so far. It may only be a 0.2% cut on their existing deal, but the shockwaves will be felt across the lending industry.”
Meanwhile, for first-time buyers, Skipton Building Society has reduced the rate on its Track Record Mortgage.
The 100% mortgage for those who have a consistent rental payment record has proved popular since its launch in 2023 has had a 0.05% rate cut and is now priced at 5.44%. It comes a week after a shared ownership version of the mortgage was launched.
Jennifer Lloyd, head of mortgage products and proposition, said: “We’re pleased to introduce these new 80% LTV products to our existing mortgage range, these products are designed to offer our customers even more choice and flexibility to suit their individual needs, whether they’re purchasing or remortgaging.
“Alongside these additions Track Record is also seeing a decrease which adds to the great enhancements announced last week to open the doors to even more trapped renters.”
