Reduced rates and new mortgage deals as lender competition increases

Lenders are upping the ante in the competition to secure new borrowers with a raft of new product announcements this week.

Bucking the trend of keeping rates stable and incentivising new customers with cashback and fee-free deals, Santander, Accord, Sainsbury’s, Tesco and Halifax are among the lenders that have made changes to their rates and mortgage product range at the beginning of July.

Santander has reduced rates across its product range by 0.3%. The bank’s standard two-year mortgage at 85% loan-to-value (LTV) is down to 1.74%, secured with a £999 product fee. The 70% LTV two-year rate has dropped to 1.69%, with a £1,999 fee. Santander’s key account exclusive range has also had a makeover, with a 0.05% decrease on their 60% LTV five-year rate (with £1,499 fee) and a brand new five-year product for 75% LTV with no product fee.

This week has also seen Accord Mortgages reduce its rate on two and five-year fixed 95% LTV mortgages by up to 0.40%. Customers can choose a five-year fixed rate at 3.8% with £1,000 cashback, a £495 product fee and free standard valuation. Alternatively, the same mortgage is available fixed for two years at 3.6%.

Midlands building society Leek United is offering discounted rates and zero fees on several mortgages (residential and buy-to-let) along with six new two-year fixed products. Borrowers with a 60% LTV benefit from a low rate of 1.24%, while those needing a 95% LTV will receive 2.49% and £500 cashback. Landlords with a 65% LTV can also choose between a rate of 1.79% and £500 cashback or 1.35% with a £995 fee.

Supermarkets compete with high street lenders

Tesco Bank has made changes to its first-time buyer mortgage range and reduced the cost of select fixed rate deals. First-time buyers can now access a five-year fixed deal at 3.78% with 95% LTV, down from 4%, with its three-year fixed rate at 3.69% and a two-year fix at 3.38%. For borrowers with a 90% LTV, Tesco is offering a fee-free five-year fixed rate at 2.57% for purchases or 2.59% for those remortgaging. Customers in lower LTV brackets can also benefit from reduced rates on five and two-year fixed rates.

Sainsbury’s has reduced rates across residential and buy-to-let mortgages too. The supermarket bank has cut costs on select 95% LTV residential deals and introduced new remortgage deals from 60% LTV up to 80% LTV. Sainsbury’s now offers a two-year fee-free fixed rate of 3.19% and a five-year rate of 3.29% at 95% LTV with £500 cashback. Remortgaging landlords can also benefit from the reduced rate on its five-year fixed rate buy-to-let now at 2.56% at 75% LTV with £500 cashback.

New market-leading ten-year mortgages

During a week of significant rate change announcements both Halifax and Lloyds have also launched brand new 10-year fixed rate mortgages at 2.44% and 2.42% respectively. Both have been hailed as market-leading, beaten to the top spot only by Coventry Building Society whose ten-year fixed deal is slightly lower at 2.39%. Decade-long mortgages tap into borrowers seeking long-term security, meaning they can rest assured that their monthly repayments will not increase until at least 2028.

At least for the immediate future, competition between lenders looks set to continue as they battle for new borrowers to revitalise their mortgage books. While there are plenty of good low-rate deals with impressive incentive packages advertised, the onus remains on the borrower to seek out and research the deal that best suits them.

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