HSBC, Halifax, Yorkshire Building Society, Nationwide, Platform and Virgin Money are all now offering sub-four per cent deals, with more lenders expected to follow.
The rate war comes as earlier this month, the Bank of England raised the base rate for the tenth consecutive time to reach four per cent. Markets expect the base rate to rise to 4.5 per cent by mid-2023, before falling back to 3.25 per cent in three years’ time.
The latest sub-four per cent mortgage launches
Nationwide
Nationwide has reduced rates across its fixed and tracker mortgages by up to 0.7 per cent. Its five-year fixed rate remortgage at 60 per cent loan to value (LTV), which comes with a £999 fee, was reduced by 0.19 per cent to 3.99 per cent.
The building society also reduced the rates on some of its selected switcher products, which now start at 3.94 per cent after a fall of up to 0.41 per cent. These switcher mortgages are guaranteed to be the same or lower than the remortgage equivalents.
HSBC
HSBC launched the first 3.99 per cent five-year fixed rate mortgage deal since September 2022 at the start of February. Its five-year fixed rate for remortgages comes in at 3.99 per cent for 60 per cent LTV with a £999 fee. The product is available to homeowners who are remortgaging or switching rates.
Virgin Money
Just days after HSBC’s news, Virgin Money launched a five-year fixed rate remortgage deal at 3.95 per cent, at 65 per cent LTV with a £995 fee, reduced by up to 0.25 per cent. It is available through brokers.
The bank also issued a purchase five-year deal with a £1,495 fee which was reduced by up to 0.18 per cent with rates now starting from 3.99 per cent which is also available through brokers only.
Yorkshire Building Society
The next provider to make the move was Yorkshire Building Society which reduced the pricing on its five-year fixed mortgage up to 75 per cent LTV, by 0.25 per cent, bringing it to 3.98 per cent. This is the first sub-four per cent mortgage available through the mutual since September.
The product is available for remortgage and has a £1,495 fee. It offers the incentives of a free standard valuation and remortgage legal services.
Halifax
On Wednesday this week Halifax reduced rates on its homebuyer range by up to 0.36 per cent, with deals available via brokers and direct.
Its 10-year fixed rate at 60 per cent LTV fell from 4.35 per cent to 3.99 per cent, while its 10-year fixed rate at 75 per cent LTV was reduced to 4.04 per cent from 4.4 per cent. Both come with a £999 fee and loans are available between £25,000 and £1m.
Platform
The Co-operative Bank’s intermediary arm Platform is also coming out with mortgages below four per cent from Monday 20 February.
These are both five-year fixes at 60 per cent LTV and include an option priced at 3.75 per cent for those wanting larger loans of £400,000 or more, and another priced at 3.85 per cent. The large loan option has a £1,999 fee and the alternative has a £1,499 fee. Both offer £250 cashback.
Is a sub-four per cent mortgage a good idea?
Any drop in interest rates on mortgages can seem tempting but there is a lot to consider, as we explain in our article on the pros and cons of locking in for a decade.
While a sub-four per cent mortgage may be a cheaper deal to switch to, rates may fall further. While it’s impossible to guarantee what will happen, if you lock yourself into a five or 10-year mortgage, for example, you then won’t be able to take advantage of rates if they do fall further, or you may have to pay an early fee to do so.
Mike Staton, mortgage and protection adviser at Staton Mortgages, said: “While these headline rates may appear enticing to a mortgage applicant, swap rates indicate that fixed rates will drop further.
“I don’t see a big uptake from clients who receive advice from a qualified broker for 10-year fixed rates. A lot can happen in this long time frame and you will more than likely find yourself paying a penalty to exit from the mortgage within the fixed period.”
David Hollingworth, associate director, communications, at L&C Mortgages, said: “It is important to consider that in the majority of cases a 10-year fix will carry early repayment charges throughout the fixed rate term.
“That could limit flexibility to shop around at a later date, whether that is due to a change in the rate environment or as a result of moving home.”
