Recent changes in the mortgage market have seen UK lenders adjust their rates to cope with fluctuating financial conditions. Nationwide building society and Santander, two leading mortgage providers, have rolled out new fixed-rate mortgage offers despite recent rate hikes. These changes could impact your choices whether you’re buying a new home or remortgaging your current one.
Following the increases by Nationwide and Santander, where rates saw a rise of up to 0.25 percentage points, both lenders continue to stay competitive. They are near the top of the charts in the “best buy” tables for both two-year and five-year fixed rates, catering to both new purchasers and those looking to remortgage.
Top Picks for Two-Year and Five-Year Fixed Rates
For those considering remortgaging, the lowest two-year fixed rate now stands at 4.77%, offered by NatWest, but this comes with a £1,495 fee for loans at 60% loan-to-value (LTV). Both Nationwide and Santander are hot on its heels with rates at 4.79%, paired with a more affordable £999 fee.
Lloyds Bank emerges as the leader for two-year fixed rates for new purchases, setting a rate of 4.61% with a £999 fee. This deal is a direct-only offer, not available through brokers, also at 60% LTV.
For those looking longer term, Santander currently leads with a five-year fixed rate for remortgaging at 4.4%, previously undercut by NatWest’s 4.28%. Again, this is at 60% LTV with a £999 fee.
Trends in Mortgage Approvals
Data from the Bank of England shows an increase in net mortgage approvals for home purchases from February to March, the highest since September 2022. However, there’s a noticeable drop in remortgages with new lenders, possibly indicating that many homeowners prefer staying with their current lender to avoid new financial assessments and fees.
Additional Competitive Offers
Both NatWest and Nationwide are not far behind in the competition, with attractive five-year rates for remortgaging. Nationwide offers a 4.49% rate with a £999 fee, while NatWest provides a similar rate at 4.42% but with a higher fee of £1,495. Nationwide also offers a competitive five-year fixed rate for home purchases at 4.34% for larger loans (£300,000 or more) requiring a 60% LTV and a £1,495 fee.
Other Lenders’ Movements
Virgin Money will increase its fixed rates by up to 0.2 percentage points, affecting both residential purchase and remortgage rates. In contrast, MPowered Mortgages offers a two-year purchase deal at 4.72% with a £999 fee.
Shifting Preferences in Mortgage Deals
According to mortgage expert Nick Mendes from John Charcol, there’s a shift towards two-year deals due to the hope that rates will drop soon, allowing for more flexibility and potentially lower costs in the near future. However, he also warns that if inflation remains high, the Bank of England’s base rate may stay elevated longer than anticipated, maintaining higher mortgage rates.
Skipton’s Incentives for First-Time Buyers
Skipton building society is set to decrease rates on selected fixed-rate mortgages. Notably, their “Track Record” product for first-time buyers, which offers a five-year fixed rate at a 100% loan to value with no fees, will see a rate cut from 5.65% to 5.55%. They are also reducing rates for two-year fixed deals for those with smaller deposits, improving accessibility for new homeowners.