Lenders cut mortgage rates back to start the year

Mortgage lenders have opened the year with a flurry of rate cuts, with borrowers now able to secure a two-year fixed rate from as low as 1.28 per cent. 

Barclays, Yorkshire Building Society and Leeds Building Society have all launched new mortgage ranges this week with the 1.28 per cent two-year fixed rate from Barclays hitting top spot in the best buy tables. 

The deal is available only to those purchasing a property and who have a 50 per cent deposit to put in. A £999 fee is also payable. On a £100,000 mortgage over a 25-year term this would see you make monthly repayments of £390.

The new range from Barclays includes competitive rates for first-time buyers as well. Those buying with a 15 per cent deposit can secure a two-year fixed rate from 1.65 per cent with a £999 fee. Monthly repayments on a £100,000 loan on this deal come in at £407.

Five-year fixed rates start at 1.85 per cent for those with a 40 per cent deposit and for those with 15 per cent cash to put in, rates start at 2.18 per cent. Both deals also charge a £999 fee with monthly repayments on a £100,000 mortgage coming in at £417 and £433 respectively.

Yorkshire BS steals the best-buy crown for those looking for a longer-term deal however, with a five-year fixed rate at just 2.03 per cent for both home buyers and remortgage customers with a 15 per cent deposit.

The deal comes with a £995 fee and monthly repayments on the same loan as above come in at £425 – a saving of £8 a month compared to the Barclays deal. The fee is also very slightly cheaper, which can make a big difference if added to the mortgage balance as you’ll pay interest on this over the term of the loan.

Those with a 35 per cent deposit can take advantage of five-year fixed rate mortgages at 1.77 per cent and 1.97 per cent. Both products come with a £1,495 fee. Always check the true cost of a mortgage including how the fee affects the amount you will pay overall.

A £100,000 mortgage at 1.77 per cent with a £1,495 fee would have monthly repayments of £413 and a total repayment of £125,319 over 25 years. 

A higher rate of 1.85 per cent with no fee meanwhile would see you repay £417 a month but just £124,977 over the 25-year term.

Yorkshire BS is also offering a two-year fixed rate mortgage starting at a market-leading rate of 1.90 per cent for borrowers needing to borrow 90 per cent LTV. This mortgage comes with a £995 product fee and £250 cashback on completion.

Those looking to get on the housing ladder with Help to Buy could now secure a rate of 2.04 per cent through Leeds BS for two years, while the lender’s five-year Help to Buy rate has been cut to 2.34 per cent.

Both are available up to 75 per cent LTV and come with a free standard valuation and £1,000 cashback on completion.

The Society’s Help to Buy mortgages can be obtained only through a broker and can be used for property purchase or remortgage.

Andrew Montlake, of mortgage adviser Coreco, said: ‘Lenders have carried on where they left off in 2017 and look determined to kick start 2018 in competitive fashion.

‘I suspect we will see many mortgage lenders looking to start the year in an aggressive manner in what will prove to be a very competitive mortgage market.’