The average three-year fixed rate fell 5 basis points to 5.28% last week, as twenty lenders responded to falling swaps with price cuts.
The latest interest rate monitoring data from Moneyfacts also shows that the average two-year rate fell by 4 basis points to 5.55% and the five-year rate fell by 2 basis points to 5.54% over the week.
Some loan-to-value levels saw even steeper reductions.
The average three-year fixed interest rate on 65% LTV fell by 18 basis points to 4.7% and the average two-year fixed interest rate on 50% LTV fell by 14 basis points to 4.99%.
There was welcome news for borrowers with small deposits: the average two-year fixed rate with an LTV of 95% fell from 6.2% to 6.15% and the 90% LTV fell from 5.83% to 5.77%.
Financial expert Rachel Springall from Moneyfacts said: “Building funds dominated mortgage rate cuts this week, also creating waves to compete with attractive packages.
“In addition to the measures, there were also large major banks that cut back, which is good news for borrowers.
“This week there were twenty different lenders that reduced fixed mortgage rates.
“Among the largest high street banks, Barclays made cuts of up to 20 basis points, while NatWest shed up to 26 basis points and HSBC also cut by up to 10 basis points.”
Springall welcomes moves by some building societies to reduce rates on high LTV deals.
She says: “First-time buyers remain the lifeblood of the mortgage market, so interest rate cuts, rate cuts or stimulus packages can really help them save on the overall cost of a deal.
“Skipton Building Society has made cuts of up to 30 basis points, with the 95% deal cut by 12 basis points to 5.19% for two years, securing its place as Moneyfacts Best Buy.
“Swap rates have fallen in recent days so it is somewhat inevitable that lenders will make an effort to reprice their fixed mortgages, so overall a positive week.”
But Springall warns: “The current state of play does not rule out a possible rise in the Bank of England’s base rate if inflationary pressures worsen, so indecision could be the biggest enemy for borrowers this year.”
This week’s rate reductions:
- Accord Mortgages: Reduced by up to 18 basis points
- Barclays mortgage: reduced by up to 20 basis points
- Coventry Building Society: reduced by up to 42 basis points
- Darlington Building Society: reduced by up to 20 basis points and increased by up to 10 basis points
- first direct: decremented by up to 16bps
- Gen H: Reduced by up to 15bps
- HSBC: reduced by up to 10bps
- Kensington: reduced by up to 30 fps
- Leeds Building Society: reduced by up to 16 basis points
- LiveMore Capital: reduced by up to 10 basis points
- Nationwide Building Society: reduced by up to 25 basis points
- NatWest: reduced by up to 26 basis points
- NatWest Intermediary Solutions: reduced by up to 26 basis points
- Pepper money: reduced by a maximum of 71 basis points
- Principality Building Society: reduced by up to 50 basis points
- Royal Bank of Scotland: reduced by up to 26 basis points
- Skipton Building Society: Reduced by up to 30bps
- Tipton & Coseley Building Society: reduced by up to 14 basis points
- TSB: reduced by up to 30bps
- Yorkshire Building Society: reduced by up to 14 basis points