Leeds Building Society has cut rates across a range of mortgages in a move it said would save a typical customer around £300 a month.
Among the highlights of its improved pricing is a two-year fixed rate mortgage at 4.60% which is for borrowers with up to 25% equity or deposit. There’s a £999 fee.
It’s also offering a rate of 5.59% for those buying a house but who have a deposit of just 5% or more – this is likely to appeal to first-time buyers. It also comes with a £999 fee.
For those taking out Leeds’ Shared Ownership five-year fixed rate, the new rate is 5.50% and is for available up to 95% borrower share.
Typical rates for a two-year fixed mortgage are currently 5.93% according to Moneyfacts. Meanwhile, the average five-year fixed rate today (Tuesday 2 January) is 5.54%.
Leeds’ price changes come on the same day Halifax announced it was cutting rates by 0.92% on product transfer and further advance products.
Product transfers are mortgages for customers who, when their current deal ends, remortgage to a new deal with the same lender. Further advances are additional borrowing taken out by mortgage customers with their current lender – the loan is usually at a different rate to their mortgage.
Matt Bartle, director of products at Leeds Building Society, said: “In support of our purpose of putting homeownership within reach of more people, we have decided start strong in 2024 by making reductions on rates across our mortgage product range to support more people onto and up the property ladder.
“In 2023 the mortgage market was constrained due to the ongoing pressure of the increasing cost of living, but as a lender we want to play our part to try to overcome the hurdles people face and help more people into homeownership.”
Leeds said a typical customer could save around £300 per month on these improved rates, it explained how this would work with the following calculations.
According to industry data, the average rate of a maturing mortgage is currently 2.04%, and the average residential reversionary rate is 7.73%. This means that a customer with a £155,000 loan on a 25-year mortgage term will currently be paying £659.58 per month, which would move to £1,167.56 if they stayed on the reversionary rate.
If that customer moved to the Leeds Building Society 75% LTV £999 fee product, they would be paying 4.60% which would make monthly repayments £869.50 – a potential saving of £298.03 on the reversionary rate.
December saw a number of mortgage lenders reduce their rates and today’s price cuts will offer hope there may be more to follow in 2024.
Last week, Nationwide revealed house prices had fallen by 1.8% over the last year. Its chief economist, Robert Gardner, said whilst there were ‘encouraging signs’ for potential buyers thanks to mortgage rates edging down, a rapid rebound in activity or house prices in 2024 ‘appeared unlikely’. Indeed, first-time buyer deposits were in Gardner’s words ‘prohibitively high’ and mortgage rates were still three times higher than the record low in 2021.
But Karen Noye, mortgage expert at Quilter, was more optimistic. She said: “With interest rates looking likely to be at the very least more stable next year there is the potential for a gradual recovery in 2024 on the horizon.”
