Santander will tomorrow cut interest rates on fixed-rate mortgages from 85% LTV to 95% LTV for its new buyer – a move described by estate agents as ‘aggressive’ and likely to ‘inflame the market’.
It came after Nationwide cut prices on Friday, with reductions of up to 0.16% and the lowest rate pushed to 3.54%.
Subsequently, Barclays and NatWest both announced today that they are making cuts to a number of fixed rate deals. Barclays is reducing its two-year deal for the purchase of homes with a 95% LTV from 4.92% to 4.60%.
NatWest, meanwhile, is reducing its two-year fixed rate purchase mortgage, also at a 95% LTV, from 4.81% to 4.69%. The two-year fixed rate remortgage at 90% LTV, with a product fee of £995, will be reduced by 0.8% from 4.60% to 4.52%.
Offers for first time buyers
What’s important about many of these deals is that they are high LTV products, meaning they will largely be aimed at first-time buyers.
Andrew Montlake, CEO of London-based CorecoSpeaking to the Newspage agency, said lenders were firmly in the sights of first-time buyers.
“The reductions we have seen in recent days are very encouraging and reflect falling swap rates and expectations that inflation will fall and the base rate will be cut,” he said.
“Affordability is currently improving almost by the day and it looks to be a busier than normal spring real estate market.”
The cuts come just after the Bank of England decided to do so keep interest rates at 3.75% and when many major lenders began raising their prices upward. This latest development shows how unpredictable pricing can be at the moment.
To add another ingredient to the mix, inflation data will be released on Wednesday, which could further shake things up when it comes to mortgage prices.
Borrowers looking for a mortgage: ‘Don’t delay’
For anyone who is about to take out a mortgage, it is wise to seek advice from a mortgage advisor. An expert at hand will help you get through this busy period.
Richard Davidson, mortgage advisor at onlinehypotheekadviseur.nlalso speaking to Newspage, said: “The best advice for borrowers, based on the experiences of recent years, is to always fix the interest rate if possible.
“While rate forecasts are plentiful in the current landscape, we have seen that unexpected events can easily disrupt them.
“Despite the general belief that the trend was downward, it was a roller coaster, with sudden jumps throwing everything out of balance. The advantage is that most lenders allow you to ‘switch’ during the process; if better rates become available you can take them, but if they rise you have already secured the lower interest rate.
“Economic data is priced in in advance, so unless there is a shock outcome, decisions about inflation, GDP or the Bank of England have no immediate impact on interest rates.”