Experts speculate that the intense competition stems from several factors, including:

  • Higher lending targets: Lenders aim to meet ambitious lending goals in the current market.
  • Focus on existing customers: Retaining existing borrowers is often more cost-effective than attracting new ones.
  • BoE base rate stability: The recent pause in Bank of England base rate hikes creates confidence in market stability.


While remortgage options seem promising, potential borrowers are advised to research and compare deals across various lenders to secure the best offer. It is also essential to factor in arrangement fees and other associated costs alongside the interest rate to get a clear picture of the actual cost of securing a new mortgage. Consulting with a mortgage broker can help you navigate the volatile market to secure the most suitable deal.


Which Lenders are Lowering Rates?

This week, Barclays and Santander announced significant rate cuts across their mortgage offerings, following similar moves by HSBC and Halifax last week. Aiming to entice borrowers, Barclays is making a “significant move” by slashing two-year fixed rates by up to 0.5%, while Santander joins the race with its five-year fixed rate diving below 4%.

This flurry of reductions offers much-needed relief to mortgage holders facing an anticipated Bank of England base rate rise and potentially higher costs in the future.

Barclays is leading the field by focusing on two-year fixed-rate deals. Borrowers with a 60% loan-to-value (LTV) ratio can secure a rate of 4.17%, down from 4.62%. Those with 75% LTV will see a half-point decrease to 4.2%, while 95% LTV mortgages drop to 5.5% from 5.8%.

Santander is offering competitive rates for both new customers and remortgages. Notably, five-year fixed rates plunge below 4%, with new customers accessing a 3.94% rate for 60% LTV mortgages. Existing customers remortgaging with Santander can secure an even better deal at 3.89%.

Santander also announced targeted cuts of up to 0.82% across various segments, including new-build properties, large loans, buy-to-let mortgages, and exclusive rates. Graham Sellar, Head of Business Development, Mortgages at Santander, said in an interview with Sky News, “We are committed to helping borrowers access more affordable loans.”

This unprecedented rate-slashing event is welcome news for homeowners, particularly those facing potential cost increases due to anticipated Bank of England base rate hikes. With attractive offers from multiple lenders, it is an opportune time for borrowers to compare rates and explore refinancing options.

As competition intensifies, borrowers can anticipate continued rate reductions and more favourable lending terms, ultimately leading to potentially significant cost savings.


What this Means for Fixed-Rate Mortgage Borrowers

This intensified competition among mortgage lenders presents a timely opportunity for homeowners to escape spiralling costs and secure comfortable, affordable loan terms. For those nearing the end of their fixed-rate periods, exploring remortgaging options could prove financially advantageous, offering valuable breathing room in the face of rising bills.

For fixed-rate mortgages, the interest rate remains the same until the end of the term, typically two or five years. Once the term expires, borrowers need to choose a new deal. Doing nothing would leave them on a variable rate, currently averaging over 8% – significantly higher than most fixed-rate deals.

Around 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year. While their next deal is likely to be more expensive, lenders are now cutting rates to attract new customers and retain existing ones. This competition is good news for borrowers, as it means they may be able to find a new fixed-rate deal that is not as expensive as they may have feared.

The new rate cuts have been made by some of the biggest lenders in the UK, including Barclays, Santander, and Halifax. For example, Barclays has recently cut rates on some of its two-year fixed-rate mortgages by up to 0.75 percentage points.


Tips for Securing the Best Mortgage Rate

There is no doubt that the recent rate cuts are a positive sign for fixed-rate mortgage borrowers facing higher household bills. However, comparing deals and seeking professional advice is still essential to ensure you get the best possible deal.


Here are some additional tips for fixed-rate mortgage borrowers:

  • Start shopping around for a new deal a few months before your current deal expires. This will give you time to compare different lenders and find the best rate.
  • Consider using a mortgage broker. A broker can help you find the best deal for your circumstances and can also negotiate with lenders on your behalf.
  • Don’t be afraid to haggle. Lenders are often willing to offer better rates to borrowers who are willing to negotiate.


By following these tips, fixed-rate mortgage borrowers can find a new deal that helps them cope with rising household bills.


The Outlook for 2024

The UK residential mortgage market kicked off in 2024, boasting the widest selection of products in over 15 years, according to data from the financial information site Moneyfacts. In just one month, the available options for homeowners surged from 5,694 in December 2023 to a staggering 5,899 in January 2024.

This represents a significant upswing, with Rachel Springall, a finance expert at Moneyfacts, noting “the biggest rise month-on-month in product choice since September 2023.” That previous high occurred in a period of intense market activity, marked by frequent repricing and deals lasting an average of only 15 days.

“A rise in choice and cheaper mortgage rates are promising signs for those looking to refinance this year,” Springall added. The increased competition amongst lenders translates into more favourable terms for borrowers, offering a window of opportunity for those seeking to switch to a more cost-effective mortgage.

This expansion in product availability suggests a dynamic and responsive market catering to the diverse needs of homeowners. With more options, borrowers can compare rates and features more effectively, potentially securing deals that better align with their financial goals.