NatWest has fuelled a home loan price war with the launch of a market-leading fixed rate deal at 3.89 percent.
It is the latest of the high street lenders to offer deals at under 4 percent against the background of the Bank of England’s decision to cut the base rate by a quarter point to 5 percent.
At the same time, so-called swap rates, which set the interest rates finance giants lend to one another, have also been edging down.
To date, most of the market leading mortgage deals are only available to those with a big deposit of around 40 percent. However, there are hopes that better deals will soon be available to first time buyers with less to put down.
NatWest is reducing the rate on a five-year fix based on a 60 percent loan to value to 3.89 percent. It comes with a hefty fee of £1,495.
There is also a two-year fix at 4.05 percent but there is a punishing fee of £3,499.
Santander has also launched a range of mortgage reductions which take effect from today.
Mortgage brokers welcomed the reductions and predicted more will follow in the coming days.
Tony Castle, Managing Director at PFG Mortgages, told Newspage: “The good news just keeps coming on the mortgage front.
“This is a great start to the week with NatWest announcing further rate reductions.
“Rates falling below 4 percent and continuing to decrease is a huge and much needed relief to not only homeowners but also aspiring buyers.
“The feel good factor seems to be back. Clearly, this week’s inflation data will be closely monitored by lenders and could determine what happens to rates in the weeks ahead.”
Katy Eatenton, Mortgage & Protection Specialist at Lifetime Wealth Management, said: “Is there a better way to start the week?
“With rate reductions announced from NatWest and Santander for this week, there is definitely a rate war looming. The start of the year was shaky, so lenders may be trying to get the business in before the year ends.”
Director at R3 Mortgages, Riz Malik, said: “This should be another fantastic week of sizzling rates as the UK basks in the sun.
“All eyes, of course, are on Wednesday and the latest inflation data. That will be a key influencer of what happens to rates next.”
Ranald Mitchell, Director at Charwin Mortgages, said the reductions by NatWest and Santander are “yet another volley in the ongoing mortgage rate war among the UK’s biggest banks, and it’s music to the ears of consumers nationwide”.
He added: “As rates drop, it’s an all-around win for anyone looking to secure a mortgage. It’s clear that, in this competitive landscape, NatWest is keen to stay ahead of the pack, offering more affordable options for homeowners.”
