Mortgage price war hots up as Barclays undercuts rivals with 3.83% deal
HSBC for Intermediaries and Barclays for Intermediaries have taken the mortgage price war to a new level by launching a selection of the most competitively priced rates within a few hours of each other.
The cost of funding mortgages has steadily decreased, particularly after the Bank of England's base rate reduction to 5%.
Barclays new 3.83% five-year fix is available to its new and existing higher-earning 'premier customers' although its standard five-year fix is only marginally higher at 3.84%. Both rates have an £899 product fee and are available to applicants buying a home with a 40% deposit. The mortgages are available for mortgages between £5,000 and £2 million. Barclay's new three-year fix at just over 4% also looks like good value for money.
HSBC’s new and lowest rates are available to first-time buyers and home movers borrowing between £10,000 and £5 million. The five-year fix for its 'premier customers' is 3.92%, and it has a £1,499 fee. The standard five-year fixed rate is 3.95%, with a £999 arrangement fee. Applicants will need a 40% deposit to qualify for these mortgages. The minimum loan size is £10,000, and the maximum loan size is £5 million.
Good news - rates are coming down
It is good news for homebuyers that banks and building societies are lowering their rates. Two—and five-year fixes are much better value for money. Many lenders seem to be offering cheaper rates for borrowers buying a home rather than remortgaging.
Aaron Strutt, product director at Trinity Financial, says: "The lenders are still fighting it out for business, and we expect the price war to continue. If you are looking for a mortgage, it pays to shop around now. Other lenders may well lower the price of their mortgages over the coming days."
What about two-year fixed-rate mortgages?
Many borrowers are not keen to lock into a mortgage for five years because they think rates will come down. HSBC's two-year fixed rate is just over 4.40%, with a £999 arrangement fee. Barclays's two-year fix has also been lowered to just over 4.40%, with an £899 production fee. Applicants will need a 40% deposit to qualify for these rates.
HSBC rate representative example: A capital and interest mortgage of £400,000 payable over 35 years, initially on a fixed rate basis at 3.92% and then on the lender's 6.99% standard variable rate for the remaining 30 years. The 3.92% rate would require 60 monthly repayments of £1,750.67 followed by 300 payments of £2,461.23. The total amount repayable would be £992,894.00 made up of the loan amount, plus interest (£593,536.86) and £1,499 (product fee), £0 (final repayment charge), £17 (completion fee). The overall cost for comparison is 6.1% APRC representative.
Barclays rate representative example: Representative example for 3.83% five-year fix: A capital and interest mortgage of £400,000 payable over 35 years, initially on a fixed rate basis at 3.83% and then on the lender's 8.49% standard variable rate for the remaining 30 years. The 3.83% rate would require 60 monthly repayments of £1,730.54 followed by 360 payments of £2,842.65. The total amount repayable would be £1,128,326.40 made up of the loan amount, plus interest (£727,185.67) and £899 (product fee), £80 (final repayment charge), £35 (completion fee). The overall cost for comparison is 6.9% APRC representative.
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The information contained within was correct at the time of publication but is subject to change.
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