Mortgage lenders ‘treading fine line’ on competitive homebuyer deals

Mortgage lenders are “treading a fine line” between offering attractive rates for homebuyers and getting caught out by rising swap rates, Rightmove warns.

It comes after Santander became the first major lender to raise its mortgage pricing this week after large cuts earlier in January, while Nationwide at the same time has reduce its own rates.

Matt Smith, Rightmove’s mortgage expert, said: "Some conflicting rate trends show that lenders are treading a fine line between offering some of the most competitive rates in many months and being caught offside by swap rate changes. Lender margins remain tight, and indeed after a VAR check it appears one lender jumped the gun slightly with its rate cuts, needing a slight correction.”

Rightmove analysis suggests the average five-year fixed mortgage rate is now 4.67%, down from 4.85% a year ago, while a two-year deal has dropped from 5.16% to 4.98%.

The average 85% loan-to-value (LTV) five-year fixed mortgage rate is now 4.60%, down from 4.88% a year ago, while the average 60% LTV five-year fixed mortgage rate is now 4.13%, down from 4.57%.

Smith added: "Average rates continue to trend downwards, with further reductions in this week's data, and more expected to come, with those looking to take out a mortgage soon likely to see much more attractive deal on offer for them than at the peak six months ago."