Multiple lenders reduce rates on fixed rate mortgages

Multiple mortgage providers have recently cut the rates to its fixed rates products, including by up to 0.26 per cent.

What does this mean for buyers?

A reduction in mortgage rates means that buyers can enjoy lower monthly payments on their mortgages than they could in previous months, making now a more favourable time to buy.

For example, one of the lenders who reduced its rates is Santander, which has reduced selected fixed rates by 0.15 per cent and selected buy-to-let fixed rates for new and existing buyers by up to 0.1 per cent.

Halifax also followed suit, reducing rates by 0.15 per cent on selected two and three-year products, and Nationwide Building Society has announced that it has cut two, three and five-year fixed rates by a larger portion of 0.26 per cent.

As an estimate, a 0.26 percent reduction in interest rates on a home valued at the UK average of £269,000 could mean a monthly saving of around £41.63,* which over the course of a five year fixed term could result in savings of £2,497.80.

Additionally, the inflation rate has moved in a more positive direction, dropping to 2.8 per cent. A lower inflation rate can often lead to lower interest rates, meaning it is possible more providers will begin offering similar improvements.

These cuts come in spite of the fact that over the course of the last week the base rate was not reduced.

What is the base rate?

The base rate is the rate at which banks can borrow from the Bank of England and typically influences the deals and rates that borrowers can expect from lenders.

Last week the Monetary Policy Committee (MPC) for the Bank of England made the decision not to reduce the base rate, and instead hold it at its current position of 4.5 per cent.

As lowering the base rate makes it cheaper for banks to borrow money, changes to it are often reflected in the interest rates for mortgages and other loans. This means that a reduction in the rate is typically something homebuyers are hopeful for.

However it appears that despite the hold, lenders are still offering reductions on their rates, and experts think that there are other positive signs in the market.

Jason Blunden, Managing Director at Evolve Financial Solutions, said: “It was disappointing to not see the base rate reduce, however understandable bearing in mind where the inflation figure was. There was good news this week, with inflation reducing to 2.8 per cent, and we can only hope this has a more positive reflection on the base rate when the committee meet again.”

For free mortgage advice, call Evolve on 01473 603 211 or visit https://www.evolvefs.com/.

Along with the reduced mortgage rates, buyers can also benefit from a range of buying options to make the homebuying process easier. To find out more, visit https://allison-homes.co.uk/allison-homes-buying-options/.

We have a range of homes available to purchase across the East Midlands, East of England and South West. To find out more about our available homes, visit https://allison-homes.co.uk/developments/.

*Based on UK House Price Index for January 2025.

*Estimate based on Nationwide Mortgage Calculator Data comparing a rate of 5.30 per cent to a rate of 5.56 per cent on an average priced UK home over a 25-year repayment period.