In a surprising move, though calculated one, Santander and Barclays have unveiled mortgage deals with interest rates below four per cent.
We haven’t seen rates this low since last November, banished by recent economic turmoil. However, as always with banking, not everyone will benefit.
The Bank of England’s hints at further base rate cuts have given lenders confidence, igniting competition.
But while sub-four per cent mortgages sound appealing, they remain elusive for many, particularly first-time buyers. High fees or strict criteria may apply, ensuring only the most creditworthy and deposit-rich can take advantage.
The reduced rates remain elusive for many
PEXELSSome things never change eh? Savers won’t be ecstatic either, as the gap between the interest they receive and real-world inflation is now wider than Elon’s smile on Election Day.
The hope now is that lower mortgage rates may push other lenders to follow suit. Nationwide, the UK’s largest building society is already trimming some rates. Still, affordability remains a concern.
A new two-year fixed mortgage stands at 5.48 per cent, while five-year deals hover at 5.29 per cent. For many borrowers, sub-four per cent rates remain more dream than reality.
Borrowers on existing fixed-rate mortgages won’t see the benefit either – at least not right away.
LATEST DEVELOPMENTS
Jonathan Rolande shared his analysisJONATHAN ROLANDEMore than 80 per cent of UK mortgage customers are on fixed deals, and rates won’t change until their term expires.
With 800,000 fixed-rate mortgages expiring annually until 2027 - many locked at a comfy three per cent or lower - higher monthly payments loom for many. However, with lenders trimming their rates, the financial hit may be less severe than many feared. Phew.
But despite all this, we should see these rate cuts as a positive sign. But while we celebrate the return of lower rates, others are left wondering when - if ever - their turn will come. The banks have secured their headlines, now let us hope others follow suit.
Jonathan Rolande is a property expert from the National Association of Property Buyers and the founder of House Buy Fast.
