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Highlights:
- UK mortgage rates decline daily this week: Average five-year fixed rate now at 5.40%, down from 6.5% in September 2023.
- Barclays and Nationwide adjust rates: Barclays offers 3.71% for select borrowers; Nationwide lowers five-year rates to 3.74%.
- Nationwide expands lending criteria: First major lender to offer mortgages at up to six times a borrower’s salary.
Mortgage rates across the UK have fallen steadily throughout the week as lenders compete to attract potential homebuyers by offering more competitive deals. As of Friday, the average five-year fixed mortgage rate dropped to 5.40%, according to data from Moneyfacts. This marks a slight decline from Monday’s 5.45%, with consecutive reductions each day.
The trend reflects a broader pullback from elevated levels seen last year. In late September 2023, the average five-year fixed rate exceeded 6.5%, underscoring the shift in market dynamics over the past year.
Several major lenders, including Barclays PLC (LSE:BARC) and Nationwide Building Society, have recently made notable adjustments to their mortgage offerings. Barclays on Thursday introduced the lowest five-year fixed rate among top rivals at 3.71% for borrowers able to provide a 40% deposit, though the deal includes an upfront fee. Meanwhile, Nationwide lowered its five-year rates to 3.74% earlier in the week as it moved to ramp up competition in the market.
Nationwide also expanded its lending criteria this week, becoming the first major lender to offer mortgages at up to six times a borrower’s salary, a move aimed at broadening access for high-income buyers. This strategy suggests that lenders are looking to innovate and capture new segments of the market amidst ongoing rate adjustments.
These rate cuts reflect the intense competition among lenders to secure a larger share of the mortgage market. With rates steadily declining, prospective buyers may find more attractive deals available, potentially boosting mortgage activity in the coming months. However, borrowing costs remain above pre-2023 levels, and conditions for securing lower rates often involve meeting stringent criteria, such as large deposits or high income thresholds.
The downward trend in rates signals a notable shift compared to the sharp increases seen during the latter part of 2023, suggesting a more stabilized lending environment.
