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Highlights:
- Mortgage rates continue to fall: Average two-year fixed-rate mortgage dropped from 5.4894% to 5.4685% this week.
- Santander and Barclays lead cuts: Santander reduced rates on over 70 products, with Barclays and others following suit.
- Optimism grows for further reductions: Experts note the possibility of additional rate cuts by high-street lenders in the coming weeks.
Mortgage rates in the UK saw consistent declines this week, with prominent lenders such as Barclays PLC (LSE:BARC) and Banco Santander (LSE:BNC) leading the charge by reducing rates across their mortgage offerings. This marks the third consecutive week of falling rates, bringing much-needed relief to borrowers facing high housing costs.
Steady Decline in Average Rates
According to Moneyfacts, the average interest rate on a two-year fixed-rate mortgage dropped from 5.4894% to 5.4685% between Monday and Friday. Notably, average rates fell every day this week, highlighting a sustained trend of easing costs for borrowers.
The steady reductions in rates reflect a reversal of the increases implemented since early October. While the cuts have been welcomed, experts caution that a full-fledged price war among lenders has yet to emerge.
Lenders Lead the Way with Rate Adjustments
Santander announced on Thursday that it was lowering rates across more than 70 of its mortgage products by up to 0.23%, with its two-year fixed-rate 85% loan-to-value (LTV) mortgage now set at 4.69%. Barclays followed suit earlier in the week, joining other lenders like TSB Banking Group (LSE:TSB) in cutting rates.
Rachel Springall, finance expert at Moneyfacts, noted, “It’s good to see a prominent lender making the decision to cut fixed mortgages,” adding that these moves could signal potential relief for borrowers.
Market Outlook and Expert Insights
Nick Mendes, a mortgage expert at broker John Charcol, pointed out that while the reductions were welcome news, a widespread price war among lenders had not yet materialized. “We haven’t seen all high-street lenders make reductions in quick succession,” Mendes observed, suggesting that further moves by major lenders could follow.
Springall echoed this sentiment, expressing optimism for additional reductions in the weeks ahead: “It will be good to see if more prominent lenders decide to cut their fixed-rate mortgages in response.”
Hope for Borrowers as Rates Decline
The latest adjustments by major lenders come amid ongoing challenges in the housing market, with affordability remaining a critical concern for many borrowers. The reductions, however, offer a glimmer of hope that mortgage costs may continue to ease as competition among lenders intensifies.
As borrowers navigate this changing landscape, the coming weeks will reveal whether the current trend evolves into broader reductions across the market, potentially offering further relief to those seeking fixed-rate mortgage options.
