Mortgage rates hit new lows in the UK

Christmas 2014 is going to provide a major relief to homebuyers in the UK as leading banks and building societies are announcing attractively low mortgage rates.

On 1st December, 2014, HSBC is launching a five-year fixed-rate mortgage at lowest-ever rates of 2.48 percent, providing significant savings to homebuyers. This deal is exclusive for borrowers with a 40 percent deposit and has an application fee of £999. Last month, HSBC had announced a 0.99 percent mortgage, the first mortgage since 1996 to offer rates of less than 1 percent.

Earlier this week, Barclays had announced some rate cuts. One of its deals offers a five-year, fixed-rate remortgage at 2.79 percent, with a 30 per cent deposit and a fee of £999.

Santander has launched a two-year fixed-rate mortgage at 1.84 percent, the lowest rate it has ever offered. However, like Barclays, this mortgage is available only for remortgage customers. The deposit for this "limited period" mortgage is 40 per cent, and it charges a fee of £995.

Over the last week, Skipton BS has announced reductions of nearly 0.56 percent on its two-year fixed rate mortgages. Skipton's best offer is an interest rate of 1.95 percent, without fees, with a deposit of 40 per cent. For those looking at a deposit of 20%, Skipton offers the best deal in the market at 2.59 percent.

First Direct offers a two-year fixed rate mortgage at only 1.39 percent with a 35 percent deposit, but with a high application fee of £1,950.

West Bromwich building society offers a two-year fixed rate mortgage at a rate of 1.47 percent and an application fee of £999.

Other lenders are also expected to announce mortgage rate cuts over the coming weeks. According to industry experts, lenders have no choice, but to cut rates of fixed rate mortgages to stay competitive. Many believe that lenders are offering rate cuts due to the pressure of meeting their year-end targets.

The past few months have seen a reduction in mortgage rates in the UK because of a general belief that the Bank of England won't increase interest rates before the end of 2015 or the beginning of 2016 as opposed to earlier expectations of an increase by the start of 2015.

Rachel Springall from Moneyfacts, advised borrowers to check the true cost of mortgage and not just go by the low rates before committing to any deal.

Use our Mortgage Calculator to check how these new mortgage rates affect monthly repayments.

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