Mortgage blog: More big names cut the cost of their home loan deals

Posted 20 August 2014 by Keith Osborne

If you're looking for a cheap mortgage then there remain plenty of excellent deals to choose from. While the very lowest fixed rates are not at the rock-bottom levels that they were a few months ago, lenders are continuing to reduce the cost of some of their best deals.

Two of the UK's largest lenders have recently cut their rates, meaning it's now even cheaper to get a new mortgage if you have a small deposit.

Barclays cuts the cost of low-deposit mortgages

One of the UK's biggest High Street names has cut its rates on a range of home loans for borrowers with small deposits. Barclays has reduced the interest rate on its 90% loan-to-value fixed-rate deals to 3.99% for its two-year deal and 4.79% for its five-year product.

If you have a deposit of 15%, Barclays now offers you a five-year fixed-rate mortgage at a rate of 3.99%.

The lender has also cut the rate on its large loan lifetime tracker from 4.76% to just 3.99%. Andy Gray, managing director of mortgages at Barclays, said the 3.99% rate, which is based on the bank rate plus 3.49%, offers "much better value" for borrowers over the long term than the typical standard variable rate of 4.4%.

Over recent months, tracker rates have become more and more competitive when compared to fixed-rate alternatives. However, with the base rate set to increase in the next year experts are urging borrowers to think carefully about which type of deal to take.

Keith Osborne, editor, says: "Tracker deals look competitively priced at the moment and even if interest rates rise the chances are that they will creep up slowly. This means that you are likely to be able to take advantage of low rates for the foreseeable future. However, if you're thinking of choosing a tracker rate it is important that you ‘stress test' yourself against a sharp rise in interest rates. Ask your advisor to tell you what your mortgage repayments would be at a higher interest rate and make sure you can afford them before you commit to this sort of deal."

Other lenders reduce the price of mortgage deals

Barclays are not the only big High Street name to have reduced the cost of their mortgages in recent weeks. The Financial Times reports that Virgin Money has also reduced the rates across a range of residential and buy-to-let mortgages, following cuts by other lenders including the Yorkshire Building Society.

The lender has reduced the rates on its two- and five-year fixed-rate buy-to-let mortgages by 0.80 and 0.50 percentage points respectively, and its two-year buy-to-let tracker by 0.40 percentage points.

Virgin Money has also reduced the cost of its two-year residential mortgage trackers by 0.10 percentage points on its 70% loan-to-value deals. It has also trimmed the rates on its range of "Freedom to Fix" trackers, which allow you to convert to a fixed rate during the life of the tracker without charge.

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