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First Direct unveils sub-4% mortgage rates

First Direct has announced rate cuts across its fixed-rate repayment mortgage range, with deals below 4% set to be available from Friday.

The announcement was made following rate cuts from other lenders this week, including HSBC UK and Halifax.

As part of the revamp, First Direct is launching two products at 3.99% from Friday.

They include a 10-year fixed mortgage for people with a 40% deposit, with a rate of 3.99%, reduced by 0.98 percentage points from 4.97% previously.

Also for people with a 40% deposit, First Direct will offer a five-year fixed mortgage priced at 3.99% – a rate which is being reduced by 0.65 percentage points.

The rates will be 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% deposit will be priced at under 5%, with the range beginning at 4.54% for new customers and 4.49% for switchers.

For people with a 10% deposit, deals will start at 4.69% on First Direct’s five-year fixed standard mortgage.

Liam O’Hara, head of mortgages at First Direct, said: “We’re very pleased to be starting the year with the introduction of new sub-4% mortgages, which will be available from tomorrow.”

HSBC UK has cut rates on its residential mortgage range by up to one percentage point, with several of its rates being below 4.00% for the first time since April 2023.

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% for existing customers.

“We now also have over 150 mortgage options under 5.00% for customers, the most we have offered under this level since April 2023.”

ECONOMY Rates
(PA Graphics)

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.

Earlier this week, Halifax launched new remortgage rates, including a five-year fixed-rate product at 5.27% for homeowners with a 10% deposit, which has a £999 fee. The previous rate for this deal was 5.68%.

Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, said earlier this week: “We keep a constant eye on markets to ensure we offer value to new and existing customers.”

Danny Belton, head of lending at the Mortgage Advice Bureau, said on Wednesday: “The drop we’ve seen in mortgage rates is due to swap rates falling and lenders passing on the reductions to customers. This could be a sign of things to come, and we could see more lenders reduce rates in the coming days and weeks.”

In signs that recent mortgage rate cuts could be encouraging potential home movers who have been sitting on the sidelines, property website Rightmove reported this week that a record number of sellers put homes up for sale on its website on Boxing Day.

Just over 10,000 new properties came to market on Boxing Day 2023, a record for any Boxing Day and the biggest 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 homes for sale also jumped – and was 17% higher than on Boxing Day in 2022.