HSBC and Halifax cut mortgage prices ahead of autumn budget

Two major UK lenders have announced cuts to the interest rates on select mortgage products despite the uncertainty ahead of the autumn budget.

The average rate for a two-year fixed mortgage rose to 4.69% this week from 4.59%, according to data from Uswitch. The average five-year fixed deal remained at 5.03%. Those are the average rates on a 75% loan-to-value (LTV) mortgage, meaning buyers need to have at least 25% for a deposit.

HSBC (HSBA.L) and Halifax cut down mortgage prices, while other lenders decided to keep their deals unchanged.

The mixture of moves on mortgage deals follows the Bank of England‘s (BoE) decision to keep interest rates on hold at 4%. Traders are now eyeing a December rate cut, which would bring interest rates down to 3.75%.

Inflation data showed that the UK’s consumer price index (CPI) grew by 3.8% in the year to September, unchanged from July and August.

Meanwhile, the cost of low deposit mortgages has fallen to its lowest level in three years, as lenders cut rates and expand deals for borrowers with smaller deposits.

Data from the Moneyfacts UK Mortgage Trends Treasury Report show the average two-year fixed rate at 95% loan-to-value has dropped to 5.41%, its lowest since September 2022. The equivalent rate at 90% loan-to-value has fallen to 5.24%.

Across the wider market, the average two- and five-year fixed rates slipped by 0.04% and 0.01% respectively, to 4.94% and 5.01%. The Moneyfacts Average Mortgage Rate fell to 4.99%, down from 5.02% a month earlier and from 6.07% a year ago.

Read more: UK property market cools amid autumn budget fears

The two-year tracker rate edged down to 4.66%. The Standard Variable Rate held at 7.27%, below its 2023 peak of 8.19%.

The average shelf-life of a mortgage deal shortened to 21 days.

Product availability fell to 6,918, though the number of 95% loan-to-value deals rose to 465, the highest since March 2008.

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers with a limited deposit of just 5% or 10% will be thrilled to see the cost of a two-year fixed mortgage dip to a three-year low. The number of deals available to borrowers at 95% loan-to-value has also improved, with the pool of deals at its highest count since 2008.”

She added: “It may be a relief for borrowers to see fixed mortgage rates moving downwards once more. The Moneyfacts Average Mortgage Rate dipped below 5% and activity among lenders led to a drop in the average shelf-life of a deal to 21 days.”

Springall said borrowers were likely to “adopt a ‘wait and see’ approach” ahead of the upcoming budget, with speculation over possible changes to stamp duty and property taxes influencing decisions.

Here’s more detail on major lenders’ mortgage rates this week:

HSBC (HSBA.L) has 3.93% for a five-year deal, with a £999 fee, which is lower than last week’s 3.99%. For those with a premier standard account with the lender this rate is 3.96%.

Looking at the two-year options, the fixed standard rate is 3.73% with a £999 fee, which is also a reduction from the previous 3.84%.

Both cases assume a 60% LTV mortgage, meaning buyers need to have at least 40% for a deposit.

HSBC (HSBA.L) offers 95% LTV deals, meaning you only need to save for a 5% deposit. However, the rates are significantly higher, with a two-year fix at 4.87% or a five-year fix at 4.79%.

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’s (NWG.L) five-year deal is 3.84% with a £1,495 fee, which is unchanged from the previous offer.

The cheapest two-year fixed deal comes in at 3.71%, also unchanged. In both cases, you’ll need a deposit of at least 40% to qualify for the rates.

Barclays (BARC.L) has kept its five-year fix at 3.98%, with a £899 product fee. It also left its two-year deal at 3.73% with a £899 product fee.

However, it has cut on a raft of deals, including:

• 4.19% 2 Yr Fixed £899 product fee, 85% LTV, Min loan £5k, Max loan £2m will decrease to 4.02%

• 4.43% 2 Yr Fixed £0 product fee, 85% LTV, Min loan £5k, Max loan £2m will decrease to 4.26%

• 4.22% 5 Yr Fixed £899 product fee, 85% LTV, Min loan £5k, Max loan £2m will decrease to 4.12%

• 4.09% Green Home 2 Yr Fixed £899 product fee, 85% LTV, Min loan £5k, Max loan £2m will decrease to 3.92%

• 4.12% Green Home 5 Yr Fixed £899 product fee, 85% LTV, Min loan £5k, Max loan £2m will decrease to 4.02%

• 4.39% 2 Yr Fixed £1999 product fee, 85% LTV, Min loan £2m, Max loan £5m will decrease to 4.24%

• 4.22% 5 Yr Fixed £1999 product fee, 85% LTV, Min loan £2m, Max loan £5m will decrease to 4.20%

Barclays has this week launched 95% loan-to-value (LTV) mortgages for purchasers of new build houses, in a move aimed at easing the path to home ownership, especially for those entering the market for the first time.

The new offering applies to new build houses with a maximum purchase price of £600,000. Previously, buyers needed a 10% deposit, meaning a £60,000 deposit on a £600,000 property. Under the new criteria, that requirement could be halved to £30,000.

All Barclays’ residential 95% loan-to-value (LTV) product rates are available for these purchases, including a five-year fixed rate at 4.79% and a two-year fixed rate at 4.82%, both with no product fees.

Standard affordability and credit criteria still apply.

Earlier in the year, Barclays (BARC.L) 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.

Read more: How to sell your home before the budget

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 £67,375, enabling them to purchase a home priced at around £107,875.

However, with Mortgage Boost, the total borrowing potential can increase if a second person, such as a parent, is added to 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 (NBS.L) offers a five-year fix at 4.13%, unchanged from last week. First-time buyers are looking at 3.89% for a two-year fix, which is also unchanged. Both deals require a 40% deposit and come with a £999 upfront fee.

Furthermore, existing Nationwide customers nearing the end of their current mortgage deals can secure a two-year fixed rate of 4.79% with a 10% deposit. This fee-free option represents the maximum 0.25 percentage point reduction announced.

Eligible first-time buyers can apply for a mortgage with a minimum salary of £30,000 and joint applicants with a combined salary of £50,000. This is expected to support an additional 10,000 first-time buyers each year.

The vast majority of Nationwide’s (NBS.L) high loan-to-income (LTI) lending is conducted through its Helping Hand, which enables eligible first-time buyers to borrow up to six times their annual income. This enables borrowing of up to 33% more than the standard lending amount.

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The lender also adjusted its mortgage affordability calculation by reducing stress rates in May by between 0.75 and 1.25 percentage points, helping applicants borrow more, whether buying a first home, moving, or remortgaging.

Applicants can borrow, on average, £28,000 more; however, in some remortgage cases, customers may be able to borrow up to £42,600 more.

Halifax, the UK’s largest mortgage lender, offers a five-year rate of 4.02% (also 60% LTV), a cut from last week’s 4.17%.

The lender, owned by Lloyds (LLOY.L), offers a two-year fixed-rate deal at 4.01%, with a £999 fee for first-time buyers, which is unchanged.

It also offers a 10-year deal with a mortgage rate of 4.87%.

Santander (BNC.L) withdrew its 60% LTV mortgage products for first-time buyers on borrowing of less than £250,000 on two- and five-year terms on 19 September.

A spokesperson for the bank said that the “change was part of a reprice following the changes to swaps after the Bank of England held interest rates”.

Santander (BNC.L) continues to offer products with LTVs of 85% and above for first-time buyers, with the cheapest two-year fix coming in at 4.31% or 4.45% for a five-year deal.

NatWest (NWG.L) offers the cheapest five-year fixed rate among the major lenders, at 3.84%. When it comes to the shorter two-year fix, it is NatWest again who offers the lowest rate, at 3.71%. However, both require a hefty 40% deposit.

A growing number of homeowners in the UK are opting for mortgage terms of 35 years or longer, with a significant rise in older borrowers stretching their repayment periods well into their 70s.

Meanwhile, Skipton Building Society is allowing first-time buyers to borrow up to 5.5 times their income, helping more borrowers get on the housing ladder.

Read more: Rachel Reeves lays the ground for raising taxes in autumn budget

Leeds Building Society recently reduced the minimum household income requirement on its first-time-buyer mortgage range. This means single or joint first-time buyer applicants with a household income of £30,000 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 higher 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 this year. Many homeowners will hope the Bank of England continues to cut interest rates. At the same time, savers will likely root for rates to remain at or near their current levels.

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