Mortgages – live: Price war to hit banks as rates fall below 4%
Mortgage brokers are gearing up for “price wars” among banks vying for competition, as major lenders introduced deals with interest rates of less than 4 per cent.
First Direct is launching two products at 3.99 per cent from Friday, while several of HSBC’s rates are now below 4 per cent for the first time since April, in what brokers have said “could be a sign of things to come”, after the number of first-time buyers with a mortgage hit a 10-year low in 2023.
Despite that grim statistic, NatWest’s chair Sir Howard Davies claimed he doesn’t “ think it is that difficult at the moment” to get on the property ladder.
“You have to save and that is the way it always used to be,” he told BBC Radio 4’s Today programme, adding: “I totally recognise that there are people who are finding it very difficult to start the process, they will have to save more.
“But that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis.”
Key Points
Mortgage brokers claim lender ‘price wars’ on cards at outset of 2024
First Direct and HSBC re-introduce mortgage rates below 4 per cent
NatWest boss claims it’s not that difficult to get onto property ladder
NatWest boss ‘did not intend to underplay serious challenges’ in buying a home
15:10 , Andy Gregory
NatWest boss Sir Howard Davies has said he “did not intend to underplay the serious challenges” people face buying homes after suggesting in an interview that it was not “that difficult” to get on the property ladder.
The major retail bank chairman had also said that prospective buyers have to save, and that “is the way it always used to be” in remarks to BBC Radio 4’s Today programme.
Clarifying his remarks, Sir Howard said: “Given recent rate movements by lenders there are some early green shoots in mortgage pricing and while funding remains strong, my comment was meant to reflect that in this context access to mortgages is less difficult than it has been.
“I fully realise it did not come across in that way for listeners and as I said on the programme, I do recognise how difficult it is for people buying a home and I did not intend to underplay the serious challenges they face.
“People have to save much more than they did in the past and that is tough for first-time buyers. The role for banks in today’s environment is to lend responsibly and support customers to build a savings habit and move towards home ownership.”
Watch: Starmer suggests no tax cuts for two years under Labour without economic growth
14:34 , Andy Gregory
Mortgage market ‘heating up’ but homeowners still face ‘painful’ cost increase despite falling rates
14:13 , Andy Gregory
Lenders have priced in that the Bank will start cutting interest rates this year and have been reducing their prices for months ahead of an expected price war as the economic outlook improves further this year, Matt Mathers reports.
Workers have also recently been boosted by the government’s decision to cut national insurance contributions after the tax burden rose to its highest level in decades.
But while mortgage rates have started to come down they remain much higher than people have been used to in recent years, with more than a million homeowners set for a rise in their monthly payments when deals expire this year.
“The mortgage market may be heating up, but this won’t fully ease the pain for the roughly 1.6 million existing borrowers with cheap fixed rate deals expiring this year,” Alice Haine, personal finance analyst from Bestinvest, explained.
“They still face a heavy jump in interest payments when they switch onto a new product, with the only comfort that the situation could have been much worse,” she added.
Mortgage market heats up but homeowners face painful cost hike despite falling rates
Up to 1.5 million households due to remortgage this year
13:49 , Adam Forrest
The Resolution Foundation think tank has warned that up to 1.5 million households will have to re-mortgage in 2024 – with the average family set to pay an extra £1,800 a year.
The Bank Of England base rate cuts are expected to encourage lenders to offer better-than-expected deals, as economists offered more positive estimates at the start of the year.
The Bank’s monetary policy committee is scheduled to meet again on 1 February to make another decision on interest rates.
City analysts expect the Bank to start slashing rates in the spring, with some economists predicting they could fall as low as 3 per cent by the end of 2024, driving optimism in the market.
But Torsten Bell, the Resolution Foundation’s chief executive, said homeowners should bear in mind that many faced painful hike – even if “the increase in people’s mortgage bills won’t be as painful as they would otherwise have been”.
Interest rate cuts will soften mortgage blow by £11bn – but Brits still face £19bn rise
13:31 , Andy Gregory
Bank of England interest rate cuts are set to soften the blow of increased mortgage payments in 2024, top economists have said.
Homeowners face a brighter-than expected picture at the start of the year, as lenders begin to cut their rates – with some fixed-period deals now available at under 4 per cent.
Yet Britons are still facing a £19bn increase in higher mortgage costs between now and the end of 2025 as current deals expire, according to experts at Goldman Sachs.
Adam Forrest reports:
Interest rate cuts will soften mortgage blow by £11bn in 2024
‘Fool’s errand’ to try and time mortgage market, says broker
13:09 , Andy Gregory
Lewis Shaw, of Mansfield-based Shaw Financial Services told The Independent it would be “a fool’s errand” to try to time the market, saying: “There’s been a tendency, certainly since the Liz Truss mini-Budget, for many homeowners to want brokers to predict where market will be, and that’s not really our job.
“It’s not sensible for homeowners to try and beat the market and predict where interest rates will go.
“And trading interest rates: even the most gifted economists at some of the best investment banks in the world don’t always get this right. So it’s probably a fool’s errand to try and do that.
“Could you get a little bit of a lower rate? Maybe at the end of the year you might be able to – but you might not.”
Northern Ireland house prices rose nearly 5 per cent in December, Halifax says
12:52 , Matt Mathers
Northern Ireland saw the biggest yearly increase in house prices by far, according to the Halifax index. The average price of a home there in December 2023 was £192,153 - up 4.1 per cent from December 2022.
Scotland was in second place, with the average price of a house there at £205,170 - up 2.6 per cent in the 12-month period.
South East England, which has some of the most expensive properties in the country, recorded the biggest fall in prices. The average price of a home in the region in December was £376,804 - down -4.5 per cent.
South West England saw the second-biggest drop, with the average property there costing £293,067 - down. -3.9 per cent.
NatWest boss’s housing ladder comment ‘completely out of touch’, mortgage experts say
12:28 , Andy Gregory
Mortgage brokers have described NatWest boss Sir Howard Davies’ claims that getting onto the property ladder is not “that difficult” as “completely out of touch”.
Stephen Perkins, Managing Director at Yellow Brick Mortgages: "It is tiring reading such comments from people who bought their first house for around £10,000 with a minimal deposit and a mortgage at 2-3 times their income and who are completely out of touch with the challenges first-time buyers face getting on the housing ladder.
“Without help from the Bank of Mum and Dad or inheritance, it is incredibly hard to save the £30k or so deposit often needed to be able to buy an average-priced house, especially if privately renting.
“There are many reasons the average age of a first-time buyer keeps increasing, and it is not because young people do not want to save money or are lazy or careless with their money. It’s because the deck is heavily stacked against them without support. Sir Howard Davies should be ashamed of these comments, especially given NatWest needed support themselves and is still 38 per cent government-owned.”
Katy Eatenton, of Lifetime Wealth Management, added: “Making such bold statements with absolutely nothing to back it up is ludicrous. The cost of living is the highest it has been, rents are increasing year on year and house prices, interest rates and the lack of first-time buyer schemes are all adding to the difficulty in getting on the property ladder. Sir Howard Davies is totally out of touch with reality.”
Listen: NatWest boss claims it is ‘not that difficult’ to buy a house in Britain
12:09 , Andy Gregory
Mapped: The highest and lowest average house prices in the UK at the end of 2023
11:48 , Andy Gregory
Average house prices in each region of the UK are revealed in a new index that says that the market “beat expectations” in 2023 despite higher taxes, inflation and the wider cost of living squeeze.
Halifax’s House Price Index said property values increased by 1.7 per cent across the board in 2023, although some regions, such as South East England, saw house prices fall significantly.
Meanwhile in other regions, such as Northern Ireland and North West England, the average price of a home increased in a welcome piece of news going into 2024 for those already on the property ladder.
My colleague Matt Mathers reports:
Mapped: The highest and lowest house prices in the UK at the end of 2023
Tories to promise more help for first-time buyers in bid to turn around polling woes
11:29 , Andy Gregory
The Conservatives will seek to cut costs for first-time property buyers in an appeal to younger voters ahead of the general election.
With the cost of mortgages having soared in recent years, housing secretary Michael Gove said the government will “definitely” have a new offer for prospective homeowners in place before the country heads to the polls next year.
Tories to promise more help for first-time buyers in bid to turn around polling woes
Lenders will come out of blocks in 2024 ready to grab market share, broker says
11:10 , Andy Gregory
Riz Malik, of Essex-based R3 Mortgages, said he thought lenders would be “coming out of the blocks ready to grab market share with some very aggressive pricing” once staff return from annual leave.
“Next week is when I’m expecting the rest of the high street banks to really come out and set their stall for where they’re going to be in 2024,” he said.
“They’ll be going after the remortgage market as well, because 2023 was the year of product transfer – a lot of deals were where people stayed with their lender and renegotiated a new deal as there wasn’t a huge appetite for taking on new business because nobody knew where the market was going.
“I think with everything having settled down from there onwards, a lot of lenders will have been reassured that there haven’t been the big drops in property prices that some people anticipated in 2023.”
Mr Malik warned that economic shocks could quickly make deals “a moveable feast”.
“If a lender does come out with something, it might be time to grab it and then if things do improve later on, then obviously reassess your situation closer to the time.”
Danger in easy access to mortgage credit, says NatWest boss
10:54 , Andy Gregory
Here is more from Sir Howard Davies’ claim that it is not “that difficult at the moment” to get onto the property ladder.
He told BBC Radio 4’s Today programme: “What we saw in the financial crisis was the risk of having people being able to borrow 100 per cent in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record.
“So, there were dangers in very easy access to mortgage credit.
“I totally recognise that there are people who are finding it very difficult to start the process, they will have to save more, but that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis.”
‘Year of the squeezed middle’ as rising mortgages, food costs and taxes cost households thousands of pounds
10:38 , Andy Gregory
The Liberal Democrats also pointed to the impact of frozen tax thresholds on the public, describing 2024 as the “year of the squeezed middle”.
Research by the party suggests that the combined impact of taxes, mortgage rises and food inflation could be a more than £4,700 “hit” on the average household.
The Lib Dems are calling for a cost-of-living rescue package, with the party’s Treasury spokesperson Sarah Olney MP saying: “2024 is set to be the year of the squeezed middle, as families continue to be clobbered by unfair tax hikes, soaring mortgage payments and higher shopping bills.
“People are worried sick about paying the bills and having to make big cutbacks just to get by.
“But instead of helping, Rishi Sunak is hitting families with yet more tax rises while the Conservative Party soap opera continues in Westminster.”
Average UK property price rose nearly £5,000 in 2023
10:26 , Andy Gregory
The housing market “beat expectations” in 2023, a lending boss has claimed, with the average UK property value ending the year £4,800 higher than it had been at the end of 2022, according to an index.
Property values increased by 1.7 per cent on average across 2023, Halifax said. Average house prices rose by 1.1 per cent month-on-month in December, the third monthly rise in a row. The typical UK house price in December 2023 was £287,105, up from £282,305 in the same month a year earlier.
Kim Kinnaird, director of Halifax Mortgages, said: “In December, the cost of an average UK home rose for the third month in a row to £287,105, up 1.1 per cent or £3,066, compared to November, reaching the highest level since March 2023.
“The housing market beat expectations in 2023 and grew by 1.7 per cent on an annual basis. The average property price is now £4,800 higher than it was in December 2022.
‘Price war is on the cards,’ mortgage broker predicts
10:13 , Andy Gregory
Lewis Shaw, of Mansfield-based Shaw Financial Services, forecasts that lenders will relaunch mortgage product ranges and reduce rates in the next week or two.
“A price war is on the cards because most lenders missed their lending targets last year and are not going to want a repeat of that, so the likelihood is they’re all going to come out of the gates storming,” he said.
He predicted significant competition, especially around remortgaging, because the 1.6 million mortgages that are due to renew in the next 12 months represent a big chunk of the market.
“So either lenders will become very competitive on their internal rates for existing customers to keep them or they’re going to have to offer better remortgage rates to tempt them away from other lenders, so that will hopefully be positive,” Mr Shaw added.
10,000 homes went on sale on Boxing Day, Rightmove says
10:10 , Andy Gregory
A record number of sellers put their homes up for sale on Rightmove on Boxing Day, the website reported.
Just over 10,000 homes went on to the market the day after Christmas Day, a record for any Boxing Day and the highest number of new sellers in any single day of the year dating back to 2011, Rightmove said.
The number of buyers contacting estate agents about properties for sale also jumped, and was 17 per cent higher than on Boxing Day in 2022.
Homeowners set to benefit from mortgage price wars, experts say
HSBC cuts rates below 4%
09:49 , Andy Gregory
HSBC UK has cut rates on its residential mortgage range by up to one percentage point, with several of its rates being below 4 per cent for the first time since last April.
More than 240 separate rates across HSBC UK’s residential and buy-to-let range have been reduced.
An HSBC UK spokesperson said: “Our latest changes mean that we are able to offer our existing customers five-year and 10-year fixed-term mortgages that are below 4% for the first time since April 2023, alongside our lowest rate of 3.89 per cent for existing customers.
“We now also have over 150 mortgage options under 5 per cent for customers, the most we have offered under this level since April 2023.”
TSB also announced cuts to some of its two-year-term mortgage rates from Friday, including reductions of up to 0.55 percentage points for first-time buyer deals and home-mover products.
Not ‘that difficult’ to get on property ladder, NatWest boss claims
09:47 , Andy Gregory
It is not “that difficult” to get on the property ladder in the UK, the chair of NatWest has said.
Asked by BBC Radio 4’s Today programme when it would be easier for people in the UK to get on the property ladder, Sir Howard Davies, chair of NatWest, said: “I don’t think it is that difficult at the moment.”
Pressed about this, he added: “You have to save and that is the way it always used to be.”
Sir Howard added: “What we saw in the financial crisis was the risk of having people being able to borrow 100 per cent in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record. So, there were dangers in very easy access to mortgage credit.
“So, I totally recognise that there are people who are finding it very difficult to start the process, they will have to save more, but that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis.”
First Direct re-introduces sub-4% mortgage rates
09:46 , Andy Gregory
First Direct has announced rate cuts across its fixed-rate repayment mortgage range, with deals below 4 per cent set to be available from Friday.
The offers include a 10-year fixed mortgage for people with a 40 per cent deposit, with a rate of 3.99 per cent, down from 4.97 per cent previously, with its five-year fixed deals also down by 0.65 per cent, in rates available to new and existing customers.
Among its two and three-year fixed rates, First Direct said fixed standard mortgages for people with at least a 15 per cent deposit will be priced at under 5 per cent, with the range beginning at 4.54 per cent for new customers and 4.49 per cent for switchers.
For people with a 10 per cent deposit, deals will start at 4.69 per cent on First Direct’s five-year fixed standard mortgage.
Homeowners set to benefit from mortgage price wars, experts say
09:41 , Andy Gregory
Mortgage experts are forecasting a lending price war, benefiting home-buyers as lenders compete to undercut each other.
Financial gurus predicted a raft of lenders would reduce their home-loan rates in the coming week or two, warning borrowers to grab good deals when they could.
At the same time, in a sign of the property market heating up, a record number of sellers put their homes up for sale on Rightmove on Boxing Day, the website reported.
Homeowners set to benefit from mortgage price wars, experts say
09:40 , Andy Gregory
Good morning, and thanks for joining us on our mortgages live blog, where we’ll be providing live updates on the latest developments and analysis.
