NatWest (NWG.L), Barclays (BARC.L), Nationwide and Halifax have all cut mortgage rates this week, fuelling expectations of a “booming market” in 2026.
The average rate for a two-year fixed mortgage remained at 4.48% this week, according to data from Uswitch. The average five-year fixed deal came in at 5%, a drop from the previous 5.04%. Those are the average rates across all lenders for a 75% loan-to-value (LTV) mortgage, meaning buyers need to have at least 25% of the purchase price as a down payment.
The Bank of England cut interest rates to 3.75% from 4% last month, taking borrowing costs to their lowest level in almost three years.
The cut in borrowing costs from major lenders comes as financial information service Moneyfacts said “expectations are high for a booming market in 2026”.
Data from the group showed the number of mortgage products on offer has climbed to its highest level in 18 years, while looser lending requirements are providing greater support for people buying their first home.
Mortgage rates have fallen over the past year, although wider global and economic uncertainty still threatens to slow or reverse further improvements. Some borrowers also continue to face higher costs when their existing deals come to an end. More than eight in 10 mortgage customers are on fixed-rate deals.
Under these arrangements, the interest rate remains unchanged until the deal expires, typically after two or five years, when a new product is selected.
In August last year, the average two-year fixed mortgage rate fell below 5% for the first time since the mini budget announced by former prime minister Liz Truss in September 2022.
Rates have declined further since then, with some additional movement in recent days, and Moneyfacts has forecast more falls early this year.
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“Expectations are high for a booming market in 2026. Mortgage rates are lower year on year, and the choice of deals is abundant,” said Rachel Springall, finance expert at Moneyfacts. “First-time buyers are not being left behind by this progress,” she added.
Meanwhile, a “rent to own” mortgage product has been rolled out across the UK this week after a successful pilot, offering would-be buyers a route to home ownership without an initial deposit.
Rent To Own, or RTO, is structured to allow aspiring homeowners to rent a property with the option to purchase it at a later stage. Part of the rent paid during the term contributes towards a future down payment.
Hanley Intermediaries is offering a “rent to own” mortgage with a five-year fixed rate of 5.79%, available at up to 100% loan to value for applicants who meet its RTO criteria.
Borrowers must have a minimum household income of £25,000 a year. Loans can be offered at up to 133% of current rental payments, with applicants required to show evidence of full rent payments over the previous 12 months.
The product carries no application or arrangement fees, reducing upfront costs for borrowers. A valuation fee applies, depending on the value of the property. The maximum loan size is £350,000, with a minimum of £30,000.
Hanley Intermediaries launched the product last spring, initially restricting it to properties in local ST postcodes, and has now extended availability nationwide.
Each application is assessed by an in house underwriting team rather than through credit scoring. The mortgage is available via the Hanley Economic Building Society branch network and selected intermediary channels.
Here’s more detail on major lenders’ mortgage rates this week:
HSBC (HSBA.L) has a 3.66% rate for a two-year deal, with a £999 booking fee, which remains unchanged from last week. For those with a premier standard account with the lender, this rate is 3.63%.
Looking at the five-year options, the fixed standard rate is 3.88% with a £999 fee, which is also unchanged.
Both cases assume a 60% LTV mortgage, meaning buyers need to have at least 40% for a deposit.
HSBC (HSBA.L) offers 95% LTV deals, meaning you only need to save for a 5% deposit. However, the rates are higher, with a two-year fix at 4.79% or a five-year fix at 4.72%.
This is because their financial situation and deposit size determine the rate someone can get. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
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The lender has recently unveiled a cashback offer of up to £2,000 in a bid to ease the upfront costs of entering the housing market.
The bank’s enhanced incentive package, which brokers say could ignite a fresh round of competitive pricing among high-street lenders, marks one of the most generous cashback schemes currently available. The measure is aimed at supporting borrowers struggling with deposit and moving costs at a time when affordability pressures remain high despite a recent easing in mortgage rates.
NatWest’s (NWG.L) two-year deal is 3.57% with a £1,495 product fee, which is a drop from last weeks 3.62%.
The cheapest five-year fixed deal available is now 3.74%, a drop from the previous rate of 3.75%. In both cases, you’ll need a deposit of at least 40% to qualify for the rates.
Barclays (BARC.L) has a two-year fix available at 3.57% with a £899 product fee, which is a drop from last week’s 3.63%. The five-year deal remains unchanged, at 3.79%.
Barclays (BARC.L) has launched 95% loan-to-value (LTV) mortgages for purchasers of new-build houses, in a move aimed at easing the path to home ownership, especially for those entering the market for the first time.
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The offering applies to new build houses with a maximum purchase price of £600,000. Previously, buyers were required to pay a 10% deposit, meaning a £60,000 deposit on a £600,000 property. Under the new criteria, that requirement could be halved to £30,000.
Earlier in the year, Barclays (BARC.L) launched a mortgage proposition to help new and existing customers access larger loans when purchasing a home.
The initiative, known as Mortgage Boost, enables family members or friends to effectively “boost” the amount that can be borrowed toward a property without needing to lend or gift money directly, or provide a larger deposit.
Under the scheme, a borrower’s eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, Barclays (BARC.L) stated that an individual with a £37,500 annual income and a £30,000 deposit would be able to borrow up to £168,375, meaning the most they could afford would be a home worth £207,375.
However, with Mortgage Boost, the total borrowing potential can increase if a second person, such as a parent, is added to the application. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.
Nationwide (NBS.L) has a two-year fix set to come in at 3.67%, a drop from the previous 3.83%. For a five-year deal, the rate remains unchanged at 4.04%. Both deals require a 40% deposit and come with a £999 upfront fee.
First-time buyers also receive £500 cashback when they complete their mortgage with Nationwide.
Carlo Pileggi, Nationwide’s head of Mortgage Products, said: “Our first set of rate cuts this year will particularly support first-time buyers onto the property ladder as well as those looking to move to their next home. Rates starting at 3.50% for new and existing home movers will come as great news to those looking to move home in 2026.”
Other changes include:
First-time buyers: reductions of up to 0.17% across two, three and five-year fixed rate products up to 95% LTV, including:
Existing and new customers moving home: reductions of up to 0.20% across two, three and five-year fixed rate products up to 95% LTV, including:
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Two-year fixed rate at 60% LTV with a £1,499 fee2 is 3.50% (reduced by 0.08%)
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Three-year fixed rate at 60% LTV with a £999 fee is 3.62% (reduced by 0.13%)
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Three-year fixed rate at 90% LTV with no fee is 4.43% (reduced by up to 0.20%)
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Two-year fixed rate at 85% LTV with no fee is 3.90% (reduced by 0.11%)
Eligible first-time buyers can apply for a mortgage with a minimum annual salary of £30,000, and joint applicants with a combined annual salary of £50,000. This is expected to support an additional 10,000 first-time buyers each year.
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The vast majority of Nationwide’s (NBS.L) high loan-to-income (LTI) lending is conducted through its Helping Hand, which enables eligible first-time buyers to borrow up to six times their annual income. This enables borrowing of up to 33% more than the standard lending amount.
The lender also adjusted its mortgage affordability calculation by reducing stress rates in May by between 0.75 and 1.25 percentage points, helping applicants borrow more, whether buying a first home, moving, or remortgaging.
Applicants can borrow, on average, £28,000 more; however, in some remortgage cases, customers may be able to borrow up to £42,600 more.
Halifax, the UK’s largest mortgage lender, offers a two-year fix at 3.74% (also 60% LTV), cheaper than last week’s 3.82%.
The lender, owned by Lloyds (LLOY.L), also offers a five-year rate of 3.98%, which remains untouched.
It has a 10-year deal with a mortgage rate of 4.87%.
Santander (BNC.L) withdrew its 60% LTV mortgage products for first-time buyers on borrowing of less than £250,000 on two- and five-year terms on 19 September.
A spokesperson for the bank said that the “change was part of a reprice following the changes to swaps after the Bank of England held interest rates”.
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Santander (BNC.L) continues to offer products with LTVs of 85% and above for first-time buyers, with the cheapest two-year fix coming in at 4.06% or 4.25% for a five-year deal, higher than the previous 4.19%.
For home movers with a 40% deposit, Santander (BNC.L) is now offering a two-year fixed rate of 3.51% and a five-year deal of 3.75%, an increase from the previous 3.7% deal.
NatWest (NWG.L) and Barclays (BARC.L) offer the most competitive 2-year deal on the market for first-time buyers, with a fixed rate of 3.57% . When it comes to a five-year fixed deal, NatWest takes the crown solo, with its 3.74% offer. However, any of these deals require a hefty 40% deposit.
With the average UK house price coming at £297,755 in December, this means prospective homebuyers would need around £120,000 as a deposit to secure the cheapest rates.
A growing number of homeowners in the UK are opting for mortgage terms of 35 years or longer, with a significant rise in older borrowers stretching their repayment periods well into their 70s.
Skipton Building Society is allowing first-time buyers to borrow up to 5.5 times their income, helping more borrowers get on the housing ladder.
Leeds Building Society reduced the minimum household income requirement on its first-time-buyer mortgage range. This means single or joint first-time buyer applicants with a household income of £30,000 may now be able to borrow up to 5.5 times their earnings.
Mortgage holders and borrowers have faced higher repayments in recent years, as the BoE’s higher base rate has been passed on by banks and building societies.
Many homeowners will hope the Bank of England continues to cut interest rates. At the same time, savers will likely root for rates to remain at or near their current levels.
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