This is, in part, due to the government's Funding for Lending scheme, which was launched last August. It provides banks with cheap funds so they can loosen the shackles when it comes to mortgage deals and cut costs for customers. So what's been the latest result?
Mortgage rates tumble
Nationwide, the UK's largest building society, has slashed the cost of a range of its mortgage deals, which are now priced at
2.69% for new customers and an even cheaper 2.59% for existing customers - so long as the loan you need only amounts up to 60% of the property value or less. If you only have a 30% deposit though (or that amount of equity in your current home), the news is still good as the lender has cut the rate on its three-year fix down to 2.79%. Fees on both deals amount to £999 or £499 if you are a first-time buyer. Meanwhile, Woolwich - the lending arm of Barclays - has also chopped the cost of its mortgages. The greatest reduction of 1% was also applied to its three-year fixed rate, which is now priced at a keen 2.89% if you can lay down a 30% deposit. This makes it the cheapest deal of its kind in the bank's history. While the rate is slightly higher than Nationwide's equivalent deal, the fee is only £499 for a remortgagers and first-time buyers alike. It also offers free valuation and legal work on remortgages so, in some cases, could prove better value.
Deals for smaller deposits
While the very cheapest rates are still reserved for those with the biggest deposits, deals are getting keener for borrowers or remortgagers with less to put down too.
If you can only muster a 25% deposit for example, Yorkshire Building Society has just launched best-buy two, three and five year fixed rate mortgages at 2.49%, 2.69% and 2.99% respectively - pipping Nationwide to the post, bar the £995 fee which applies in all cases. If you have a smaller deposit of just 10% of the purchase price, your choice on the mortgage menu is still more appealing than it was. Santander has launched three new best-buy deals for borrowers who need to borrow 90% of the property value. These include a two-year fix priced at 4.49% and a three-year fix priced at 4.69% which are both exclusively available to first-time buyers at a £495 fee. The two-year fix at 4.49% is available to all homebuyers but for a higher fee of £995. Help from home
The recent move on mortgages benefits even those with a 5% deposit - a group who have been especially affected since the credit crunch hit more than five years ago. For example, as well as cutting existing rates, the Woolwich has introduced a Family Springboard mortgage - a three-year fixed rate priced at
4.69% - in exchange for 5% of the property value. To qualify, however, the buyer's family must open a savings account linked to the mortgage into which they put 10% of the purchase price. When the three-year fixed rate finishes the savings are returned to the family. David Hollingworth, spokesperson at mortgage brokers, London & Country said: "A key benefit of this deal that will attract parents is likely to be the fact that they can keep their savings in their name rather than handing them over to their child. That may be their preference if they will want to access the cash later or don't want to gift the cash, for example if their child is buying with a partner." Maximise your mortgage chances
To qualify for any of the market-leading mortgage deals currently on offer, you will need a squeaky clean credit history. So, before applying for a mortgage, get hold of your credit report - you can do this through the
MoneySupermarket credit reporting channel - and see if there are any ways you can improve it. Read more with Jessica Bown's article, Five ways to boost your credit score. Log onto our mortgage channel to compare deals and, if you need a helping hand, you can call our mortgage partner, London & Country for fee-free independent advice on 0844 209 8725. Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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