Market News

BY Pedro Goncalves · Finance Reporter, Yahoo Finance UK

UK mortgage rates continued to fall this week, offering some respite for borrowers as economic uncertainty sparked by tariffs under US president Donald Trump pushed a growing number of UK lenders to cut rates.

The Bank of England held its interest rate at 4.5% last month after warning that global economic uncertainty has "intensified".

This is the lowest level for rates in more than 18 months, following a reduction from 4.75% in February — the third such cut since August 2024.

Financial markets and economists predict that the Bank of England will reduce borrowing costs more than expected this year to avoid a downturn.

The primary inflation measure, the Consumer Price Index (CPI), stood at 2.8% in the 12 months to February 2025, a slight decrease from the previous month. While this marks a significant drop from the peak of 11.1% seen in October 2022, it remains well above the Bank of England’s target of 2%.

Overnight, Trump froze worldwide tariffs at 10% for 90 days, indicating that the time will be used to strike deals and claims. Around 75 countries have asked the White House for talks.

However, virtually every deal mentioned was set amid a backdrop of a tariff onslaught that threatened to push the global economy into a recession.

Ian Futcher financial planner at Quilter, said "The introduction of significant US tariffs has sparked global economic uncertainty, increasing expectations that the Bank of England may be forced to cut interest rates to help stimulate growth. The recently announced pause does change the picture slightly but there is still a huge amount of ambiguity in how things will play out. This shift in outlook has already begun to feed through into UK swap rates—the mechanism that helps price fixed-rate mortgages. As swap rates have dropped, some lenders have moved to cut mortgage rates, with more likely to follow if market conditions persist. Homeowners with variable or tracker deals could benefit further should the Bank of England act.

“For those on fixed-rate mortgages, it's essential to plan ahead. Ideally, borrowers should have their paperwork in order at least six months before their current deal ends. That allows them to move quickly and secure a competitive rate as they approach the end of their term. With mortgage pricing often fluctuating in response to economic news, being ready to act early can make a significant difference to monthly repayments. A conversation with a mortgage adviser can help ensure no opportunity is missed."

Coventry Building Society led this week's rate cuts, reducing its two-year fixed deal to 3.89% for borrowers with a 65% loan-to-value (LTV) ratio — one of the most competitive rates on the market, though it comes with a £999 fee.

Several smaller banks followed suit. Clydesdale Bank, Newcastle Building Society, and the Co-operative Bank cut selected rates, while MPowered Mortgages slashed pricing across two-, three- and five-year fixed products. Its two-year fix at 60% loan-to-value (LTV) now starts at 4.05%, or 4.29%, with no fee.

Larger lenders, including TSB, Metro Bank (MTRO.L), and Bank of Ireland, also made cuts. However, the UK’s most prominent players — Halifax, Nationwide (NBS.L), HSBC (HSBA.L), Santander (BNC.L), Lloyds (LLOY.L), and NatWest (NWG.L) — have mostly held back, with brokers speculating they are adopting a “wait and see” strategy.

HSBC mortgage deals

HSBC (HSBA.L) has a 4.15% rate for a five-year deal, unchanged from the previous week. For those with a Premier Standard account with the lender, this rate is 4.10%.

Looking at the two-year options, the lowest rate is 4.25% with a £999 fee, the same as before.

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 5.47% or 5.19% 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 mortgage deals

NatWest (NWG.L) has a five-year deal coming in at 4.13% with a £1,495 fee, higher than last week’s 4.08%.

The cheapest two-year fix deal is 4.14%, higher than the previous 4.13%. In both cases, you'll need at least a 40% deposit to qualify for the rates.

Santander mortgage deals

At Santander (BNC.L), a five-year fix is 4.16%, unchanged from the previous week. It has a £999 fee, assuming a 40% deposit.

For a two-year deal, customers can also secure a 4.08% offer, with the same £999 fee, which is lower than last week’s 4.15%.

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 mortgage deals

The five-year fix at Barclays (BARC.L) is 4.12%, unchanged. For "premier" clients, this rate drops to 4.10%.

The lowest you can get for two-year mortgage deals is 4.11%, unchanged from last week’s deal.

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 mortgage deals

Nationwide (NBS.L) offers a five-year fix at 4.34%, with a £999 fee and a 40% deposit. This is unchanged from last week.

Nationwide offers a two-year fixed rate for home purchase at 4.34% with a £999 fee — also for borrowers with a 40% deposit. Again, unchanged from the previous week.

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 mortgage deals

Halifax, the UK’s biggest mortgage lender, offers a five-year rate of 4.17% (also 60% LTV), the same as before.

The lender, owned by Lloyds (LLOY.L), offers a two-year fixed rate deal at 4.06%, with a £999 fee for first-time buyers, which is also unchanged.

It also offers a 10-year deal with a mortgage rate of 4.78%.

The lender has announced the launch of a new 1.5-year fixed-rate remortgage product in response to growing demand among borrowers for shorter-term deals.

Shorter-term fixes offer certainty over monthly payments while allowing households to switch to a new deal sooner to take advantage of lower rates.

Cheapest mortgage deal on the market

Despite the recent adjustments, sub-4% mortgage deals remain elusive at major lenders. Barclays' 4.12% is currently the cheapest five-year fix among the top banks, while Halifax’s 4.06% leads for two-year fixes, though both require a 40% deposit.

The average UK house price is £366,189, so a 40% deposit equates to about £147,000.

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.

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.