Selection of mortgage lenders offering 2.54% two-year fixes
Fixed-rate mortgages have increased in price over the last six months but they are still competitively priced.
A selection of lenders, including NatWest, Santander, Halifax and HSBC, offer many of the most competitive rates, and all of their two-year fixes start from 2.54%. Nationwide has just increased its 2.54% two-year fix by 0.10%.
Many borrowers opt to take five-year fixes because they cost roughly the same as two-year fixes, but short-term deals are still popular, especially for buyers unsure about their long term housing or work plans.
What are the details of Santander's 2.54% two-year fix?
Santander for Intermediaries 2.54% rate is available for property purchases and remortgages, and it is fixed until 02 September 2024. Applicants will need a 40% deposit to qualify, and the maximum loan is £1.5 million.
After the fixed period, the mortgage reverts to 3.25% over the Bank of England base rate (currently 1%), and there is a £999 arrangement fee and 3% early repayment charges apply.
Aaron Strutt, product director at Trinity Financial, says: "Mortgage lenders tend to undercut each other and offer slightly cheaper rates to attract borrowers, so it is quite unusual for many bigger lenders to offer the same rates. Even though the rates are the same, the lender's acceptance criteria vary, with some of them offering more generous qualification rules and larger loans."
Are discounted or tracker rates cheaper than the fixes?
Most borrowers opt for fixed-rate mortgages, but the cheapest deals are Bank of England base rate trackers or discounted standard variable rates. The issue with these products is the limited payment security, especially when the base rate is expected to increase.
Representative example: A capital and interest mortgage of £300,000 payable over 30 years, initially on a fixed rate basis until 02 September 2024 at 2.54% and then on a Bank of England base rate tracker (BoE plus 3.25%) currently 4.25% for the remaining 28 years, 2.54% would require 26 monthly repayments of £1,191.61 followed by 334 payments of £1,457.29. The total amount repayable would be £518,470.28 made up of the loan amount, plus interest (£ 217,211.41) and £999 (product fee), £225 (final repayment charge), £35 (completion fee). The overall cost for comparison is 4.1% APRC representative.
The actual rate available will depend on your circumstances. Please ask for a personalised mortgage illustration. Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage
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