MORE major lenders have revealed cuts to mortgage rates following hot on the heels of several big banks.
First Direct, Nationwide and Coventry Building Society are the latest to reveal a big drop in the cost of borrowing easing the pain for homeowners and first-time buyers.
Mortgage rates remain high as the Bank of England hiked the base rate several times in a bid to tackle inflation
The base rate is used by banks to set interest rates for borrowing, including mortgages.
Millions of homeowners have faced higher rates after coming off deals they initially fixed when rates were low, and first-time buyers have found it harder to get on the property ladder.
But the bast rate has remained since August last year, as inflation eased, there are expectations that the Bank of England could cut interest rates next month.
That’s prompted lenders to cut mortgage rates with a flurry of the biggest banks announcing rate reductions.
Now First Direct has joined the ranks, slashing rates by up to 0.17%.
The bank has cut rates across its range of two, three and five-year fixed repayment mortgages, for first-time buyers and home movers.
The reductions include a cut on a two-year fixed-rate deal for people with a 15% deposit, which is now priced at 4.99%, down from 5.16%.
Meanwhile, Nationwide has reduced selected rates by up to 0.3%, with rates now starting from 4.18%
Plus, Skipton has cut mortgage rates by up to 0.33% and Virgin Money has reduced rates up up to 0.22%.
Coventry Building Society has also announced rate cuts which are set to launch on Thursday, with further details to be revealed.
Gen H, a residential mortgage lender founded in 2019, has also reduced rates by up to 0.4%
The exact rates you get can depend on a range of factors though, including your income, amount you borrow and your credit score among other things.
Competition is hotting up in the mortgage market as lenders compete for customers.
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A wave of rate drops last week brought good news for homeowners and first-time buyers who have been pummelled by rising interest rates.
Halifax, HSBC UK, Barclays, Santander, NatWest and Yorkshire Building Society were among those to shake up their ranges, with some lenders cutting their mortgage rates more than once over the past couple of weeks.
Jack Tutton, director at SJ Mortgages, said: “The momentum for rate cuts continues as Nationwide and Virgin follow several other lenders last week.
“The price war is now well and truly on. With Nationwide reducing some of their rates by 0.3 per cent, this should push more lenders into making further cuts to remain competitive. This is yet more positive news for borrowers.”
There have also been some recent signs that the choice of mortgage products is improving.
Financial information website Moneyfacts said this week that it had counted 361 mortgage products available for people with 5% deposits at the start of July, marking the highest total since May 2022.
This is good news for first-time buyers, who often have a small deposit than homemovers.
Along with better rates, which mean lower monthly repayments, it means borrowers have more choice.
Simon Bridgland, director at Release Freedom said: “With this week’s cascading interest rates come a huge sigh of relief from borrowers hanging on tenterhooks, waiting very patiently for the next base rate cut.
“They need patience as I don’t think it’ll happen just yet.”
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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