Almost all major lenders are now offering under-4% deals this week, giving some respite for borrowers amid a mini price war among mortgage providers ahead of the Bank of England's interest rate decision.
The average rate for a two-year fixed mortgage stands at 4.99%, lower than last week's 5.06%, while five-year fixed deals average 5.24%, below last week's 5.31%, according to data from Uswitch.
The Bank of England (BoE) held its interest rate at 4.5% in March but is expected to reduce borrowing costs down to 4.25% later this Thursday.
The primary inflation measure, the Consumer Price Index (CPI), stood at 2.6% in the 12 months to March 2025, a slight decrease from the previous month. That means that prices have been rising at the slowest pace since December and are closer to the BoE's 2% target.
This week, Nationwide (NBS.L) has cut rates by up to 0.3 percentage points, and its new rates include a 3.84% deal for homebuyers with a 40%.
Halifax has also announced it will be reducing rates by up to 0.18 percentage points while and TSB and Virgin Money are lowering deals by up to 0.2 percentage points.
Read more: UK house prices rise for the first time since January
The UK financial watchdog has announced plans to water down its rules on mortgage lending to make it faster and cheaper for people to get home loans.
UK lenders will be freed from having to provide formal advice or to carry out full affordability assessments when arranging mortgages for many customers, under plans outlined by the Financial Conduct Authority (FCA).
“We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage,” Emad Aladhal, the FCA’s director of retail banking, said in a speech.
Skipton Building Society has launched its Delayed Start Mortgage, which allows new homeowners to postpone repayments for the initial three months, providing "breathing space" to manage the additional expenses that come with purchasing a home.
HSBC (HSBA.L) has a 3.93% rate for a five-year deal, unchanged from the previous week. For those with a Premier Standard account with the lender, this rate is 3.90%.
Looking at the two-year options, the lowest rate is 3.91% with a £999 fee, also unchanged.
Both cases assume a 60% loan-to-value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.
HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. However, the rates are much higher, with a two-year fix coming in at 4.99% or 4.94% for a five-year fix.
This is because their financial situation and deposit size determine the rate someone can get. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
NatWest (NWG.L) has a five-year deal coming in at 3.88% with a £1,495 fee. No changes from last week.
The cheapest two-year fix deal is 3.88%, again untouched from the previous week. In both cases, you'll need at least a 40% deposit to qualify for the rates.
At Santander (BNC.L), a five-year fix is 4.10% for first-time buyers, lower than the previous 4.16%. It has a £999 fee, assuming a 40% deposit.
For a two-year deal, customers can also secure a 3.94% offer, with the same £999 fee, which is also lower than the previous 4.01%.
Read more: UK taxes may need to rise in autumn, Rachel Reeves warned
Santander has also introduced mortgage products tailored to first-time buyers with large loans. These feature two- and five-year fixed-rate deals at 60% LTV, albeit with a higher £1,999 product fee.
Barclays (BARC.L) was the first among major lenders to bring back under-4% deals, with a five-year fix at the lender at 3.93%. For "premier" clients, this rate drops to 3.92%.
The lowest you can get for two-year mortgage deals is 3.92%.
Barclays has launched a mortgage proposition to help new and existing customers access larger loans when purchasing a home. The initiative, known as Mortgage Boost, enables family members or friends to effectively "boost" the amount that can be borrowed toward a property without needing to lend or gift money directly or provide a larger deposit.
Under the scheme, a borrower’s eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, an individual with a £37,500 annual income and a £30,000 deposit might traditionally be able to borrow up to £168,375, enabling them to purchase a home priced at around £198,375.
However, with Mortgage Boost, the total borrowing potential can rise substantially if a second person — such as a parent — joins the application. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.
Nationwide’s (NBS.L) lowest mortgage rate now stands at 3.84%, which is available to existing and new customers who are looking to move to a new home. This rate is available on both the two-year and five-year fixed rate products.
For the first time since September 2024, Nationwide will be offering sub-4% rates for first-time buyers. The lowest first-time buyer rate is 3.94% and available on a two-year fixed rate product at 60% loan-to-value (LTV) with a £1,499 fee. First-time buyers can also get 3.99% on the same 60% LTV, two-year fixed rate product but with a lower £999 fee.
Read more: Most popular and affordable towns for UK families revealed
Carlo Pileggi, Nationwide’s senior manager, mortgages, said: “We’re pleased to be able to make our third rate cut in three weeks as we strive to remain one of the most competitive lenders in the market. This latest round of changes includes us offering sub-four percent rates for first-time buyers, as well as reducing rates across our Helping Hand mortgages, which enable eligible first-time buyers to borrow up to six times their income up to 95% loan-to-value.”
The lender has announced it is changing the eligibility criteria for its mortgage scheme, which allows people to borrow up to six times their income.
The minimum income required to take out a Helping Hand mortgage has been reduced to £35,000 — meaning more people will be eligible for the scheme. The minimum income requirement for joint applications will remain at £55,000.
Helping Hand mortgages enable people to borrow up to six times their income, meaning potential homeowners can borrow 33% more compared to Nationwide’s standard lending at 4.5 times income.
Halifax, the UK’s biggest mortgage lender, offers a five-year rate of 3.93% (also 60% LTV), lower than the previous 4.1%.
The lender, owned by Lloyds (LLOY.L), offers a two-year fixed rate deal at 3.87%, with a £999 fee for first-time buyers, which is also lower than last week's 3.94%.
It also offers a 10-year deal with a mortgage rate of 4.78%.
Read more: UK house sales fall as stamp duty break hits demand
The lender has enhanced its five-year fixed mortgage products by increasing borrowing capacity. This improvement allows borrowers to access up to £38,000 more, enabling them to secure larger mortgages based on individual incomes.
Rachel Springall, finance expert at Moneyfacts, said: "The flourishing choice of low-deposit mortgages will no doubt be welcomed by borrowers who are either looking to remortgage or are a first-time buyer.
"The government has been clear that it wants lenders to do more to boost UK growth, and so a rise in product availability for aspiring homeowners is a healthy step in the right direction."
Amid this mini price war between mortgage providers,, prospective homeowners have some better options. NatWest's (NWG.L) 3.88% is currently the cheapest deal for five-year fixes, while Halifax's 3.87% comes out on top for two-year fixes among the top banks, though both require a 40% deposit.
The average UK house price is £297,781, so a 40% deposit equates to about £120,000.
A growing number of homeowners in the UK are opting for 35-year or longer mortgage terms, with a significant rise in older borrowers stretching their repayment periods well into their 70s.
Read more: 8 intriguing homes with links to World War Two
Lender April Mortgages offers buyers the chance to borrow up to six times their income on loans fixed for five to 15 years, from a deposit of 5%. Both buying alone and those buying with others can apply for the mortgage.
As part of the independent Dutch asset manager DMFCO, the company offers interest rates starting at 5.20% and an application fee of £195.
Skipton Building Society has also said it would allow first-time buyers to borrow up to 5.5 times their income to help more borrowers get on the housing ladder.
Leeds Building Society is increasing the maximum amount that first-time buyers can potentially borrow as a multiple of their earnings with the launch of a new mortgage range. Aspiring homeowners with a minimum household income of £40,000 may now be able to borrow up to 5.5 times their earnings.
Mortgage holders and borrowers have faced record-high repayments in recent years, as the Bank of England's base rate has been passed on by banks and building societies.
According to UK Finance, 1.3 million fixed mortgage deals are set to end in 2025. Many homeowners will hope the Bank of England acts quickly to cut rates more aggressively. At the same time, savers will likely root for rates to remain at or near their current levels.
Read more:
Download the Yahoo Finance app, available for Apple and Android.
