First Direct and the Yorkshire Building Society are the latest big names to announce new reductions for homeowners, and as expectations grow, more will soon follow suit.
Mortgage approvals hit their highest level in six months near the end of last year, official data has revealed, as more lenders announced rate cuts.
New figures from the Bank of England (BoE), published on Thursday, show that more than 50,000 loans for home purchases were rubber-stamped in November—the highest number since June 2023 and more than expected.
It comes amid growing optimism that the housing market is gradually recovering from dampened demand last year amid high mortgage rates and cost-of-living pressures on consumers.
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The average two-year fixed mortgage rate fell to 5.87% on Thursday, the lowest level since June 2023, according to research by Moneyfacts. It said the average five-year fixed deal also dipped to 5.46%.
Several high-street names reduced their rates earlier this week, including Halifax and HSBC, which is now offering a five-year deal below 4%.
First Direct, which is a division of HSBC, unveiled its latest reductions of up to 0.98 percentage points on Thursday.
The bank’s new offerings, which will be introduced on Friday, include five and 10-year fixed deals with a rate of 3.99%.
Its head of mortgages, Liam O’Hara, said: “We are committed to reducing the cost of borrowing where we can for our customers, and we’re very pleased to be starting the year with the introduction of new sub-4% mortgages.”.
The Yorkshire Building Society also confirmed to the News that it will soon reduce rates “across its range” and will publish the details next week.
A spokesperson said the society was “taking advantage of recent falls in market rates to continue passing on as much value as possible to borrowers.”
