Number of sub-5% mortgage deals has doubled this month

The number of lenders offering sub-5% mortgage deals has doubled in the past month in a sign that the cost of borrowing may be improving for buyers.

Moneyfacts data shows there are now 27 lenders offering a sub 5% fixed mortgage deals compared with 13 at the start of October.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “It’s encouraging to see cheaper mortgages on the market for borrowers, particularly the return of two-year fixed mortgages priced below 5%.

“This is great news for those who do not want to commit to a longer-term fixed deal. 

“Several large lenders have slashed fixed mortgage rates and there is much anticipation for more cuts in the coming weeks. As we head ever closer to the year-end, lenders will be weighing up both the current competition and their own lending targets, so it’s a promising market for consumers looking for a new deal.”

It comes as Barclays today launched a two-year fixed rate purchase mortgage up to 75% loan-to-value at 4.95% with an £899 fee.

Craig Fish, director at Lodestone Mortgages & Protection, told the Newspage news agency: “The rate war is well and truly underway now, and more lenders are likely to follow. 

“There is a real chance that we could see a sub 4% 5-year fix this side of Christmas, and a two-year below 4.5% also. Swap rates have tumbled this week, and lenders are now going to be slogging it out until the year-end.”