The price war in the fixed rate mortgage market gathered pace today with NatWest reducing its headline five year deal to 3.89%.
The high street lender is the latest to go “sub-4” in a rush of eye-catching cuts by leading banks and building societies.
The move by NatWest follows similar reductions by rivals such as Santander, Halifax and HSBC over recent days.
NatWest said the rate on its five year offer for borrowers with a minimum 40% deposit would be lowered by 14 basis points from 4.03% to 3.89%, with a fee £1,495.
The rates on most of the rest of its range are being lowered by 14 or 20 basis points.
The outbreak of rate cutting comes after swap rates in the City’s wholesale money markets dropped in anticipation of further moves to ease the cost of borrowing from the Bank of England. The Bank delivered its first cut in four years earlier this month when its benchmark rate was lowered from 5.25% to 5%. Inflation figures for July that could determine if there will be more rate cutting are revealed on Wednesday.
Brokers said they expected to reductions to have a knock on effect in the property market as buyers moved to lock in the improved rates.
Tony Castle, managing director at PFG Mortgages com said: “The good news just keeps coming on the mortgage front. This is a great start to the week with NatWest announcing further rate reductions first thing Monday.
“Rates falling below 4% and continuing to decrease is a huge and much needed relief to not only homeowners but also aspiring buyers. The feel good factor seems to be back. Clearly, this week’s inflation data will be closely monitored by lenders and could determine what happens to rates in the weeks ahead.”
Riz Malik, Director at R3 Mortgages said: “Not even an hour into the new week and NatWest have shot out of the blocks with even more rate cuts.
“With Santander also announcing cuts late on Friday this should be another fantastic week of sizzling rates as the UK basks in the sun. All eyes, of course, are on Wednesday and the latest inflation data. That will be a key influencer of what happens to rates next.”
