Barclays and Santander Lower Mortgage Rates

The competition among mortgage lenders has intensified for individuals searching for a new mortgage deal, providing some relief for those burdened with higher bills. Brokers point out that currently, more favourable mortgage options are available for those looking to refinance their mortgage than those purchasing a new property. This can be particularly beneficial for individuals whose current affordable fixed-rate mortgage agreement is nearing its end and searching for a replacement. The banks Barclays and Santander have recently revealed additional significant reductions. On Wednesday 10 10th January 2024, the companies announced their plans to decrease interest rates for certain mortgage products by as much as 0.82 percentage points.

The cost of bills has increased.

The fixed mortgage interest rate remains constant for the agreement, typically two to five years, before being replaced with a new one. Failing to act would result in individuals switching to a costly variable rate, which averages over 8%.

In 2024, approximately 1.6 million borrowers who currently have affordable fixed-rate contracts will see their deals expire. Although their upcoming contracts are expected to be more costly, the financial impact may be softened by a series of interest rate reductions from significant mortgage lenders that have occurred since the year’s start.

According to mortgage broker Coreco’s Andrew Montlake, it is intriguing that specific lenders offer more competitive mortgage options for remortgages in the mortgage market than property purchases, reflecting their perception of the current market dynamics.

The recent announcement is a boon for those apprehensive about the shift from ultra-low mortgage rates to a higher-rate environment. It offers a measure of relief, as the escalation in mortgage rates is not as steep as some might have feared, easing concerns about the transition into a higher-rate environment.

The graph illustrates the average interest rates for two-year and five-year fixed deals. On January 9, 2024, the average interest rate for the two-year fixed mortgage deals stood at 5.76%, soaring to 6.86% in July 2023. Meanwhile, the five-year fixed mortgage rate was 5.37%, with its apex reaching 6.51% in October 2022.

According to Moneyfacts, a financial information service, there’s been a notable decline in the mortgage rates for new two-year fixed mortgage deals since the year’s onset, indicating a potential easing of borrowing costs.

The current mortgage rate is 5.76%, representing a reduction of about one percentage point from last year’s zenith, offering some respite to borrowers.

The current average rate for five-year contracts is 5.37%.

Forecasters anticipate that the impact of persistently elevated mortgage rates will exert downward pressure on the housing market, potentially leading to a dip in property values and an uptick in overdue payments over the course of this year.

What occurs if I fail to make a mortgage payment?

Suppose you need help making mortgage repayments for two or more months. In that case, your lender will classify your account as being in arrears, which can have profound financial implications. In such circumstances, your lender must treat you fairly and consider any proposals you might have for altering your payment strategy, which could involve a temporary reduction in your mortgage repayments to help manage your financial obligations.

Your lender may offer options such as extending the mortgage term or allowing you to make interest payments only for a specific period, which can provide some relief on your mortgage obligations. It is important to note that any adjustments to your repayment arrangements, including changes to mortgage payments, will be recorded on your credit file, potentially affecting your future borrowing capabilities.