Lloyds is now offering the lowest homebuyer mortgage product on the market at 3.47% for Club Lloyd customers, fixed for two years and for those with 40% equity in their home
Four major banks have slashed the interest rates on their mortgage products in a new year boost.
In December, the Bank of England base rate was cut from 4% to 3.75%, in good news to some mortgage holders. Many lenders have recently been reducing their mortgage rates.
Lloyds is now offering the lowest homebuyer mortgage product on the market at 3.47% for Club Lloyd customers, fixed for two years and for those with 40% deposit.
This comes with a £999 fee. Halifax, meanwhile, is offering a rate of 3.74% for a two-year fixed rate mortgage.
Barclays is now a 3.57% two-year fixed rate mortgage with an £899 product fee for those with a 40% deposit. There is also a 3.78% two-year fix for those who are remortgaging with 25% equity in their home. This product comes with a £999 product fee.
HSBC also has a 3.78% deal though it comes with a slightly higher £1,008 fee. There is a 3.56% two-year fix with a £999 product fee for those with a 40% deposit.
The average two-year fixed residential mortgage rate today is 4.80% according to Moneyfacts.
David Fell, lead analyst at Hamptons, said: “Continued falls in mortgage rates are tempting more buyers back into the market.
“Movers in particular chose to sit tight as rates peaked, but with mortgage pricing dropping back below 3.5% early this year, many would-be sellers are reassessing their options as the monthly cost of a potential new home falls.
“With monthly mortgage payments usually homeowners’ largest single bill, even a small fall in rates can offset worries about wider economic weakness.
“And there is a distinct possibility that mortgage rates may fall further this year if inflation surprises to the downside.“
Different types of mortgages explained
If you have a tracker mortgage, it means your deal and monthly repayments move in line with the Bank of England base rate. A tracker mortgage usually tracks above the base rate.
If you have a standard variable rate (SVR) mortgage then your deal can change at any time, though they do roughly tend to move in line with the base rate too.
SVRs are generally the most expensive type of mortgage. If you have a fixed rate mortgage, it means you have agreed to pay a fixed amount each month for a set period of time.
You are normally moved to your lender’s SVR when your fixed deal ends. If your mortgage is due to expire, you should compare rates now and speak to a mortgage broker to look at your options.
Generally speaking, lenders let you secure a new deal around three months in advance. If rates come down, you may be able to cancel the deal you’ve agreed to and sign up to a cheaper rate – but check with your lender before signing up first to see if there are any fees.