Long-awaited good news for borrowers as UK lender cuts mortgage rates

Long-awaited good news for borrowers as UK lender cuts mortgage rates After weeks of rises, one lender has made a move Borrowers have been handed some good news after weeks of relentless mortgage rate rises. The past month or more has seen nothing but increases, with average rates now landing in the area of 6%. The big-name lenders made multiple rises during September, seemingly pricing in an anticipated Bank of England base rate rise when its Monetary Policy Committee next meets on November 5. An unstable global situation has been to blame, with the US-Israel-Iran war showing little sign of coming to a conclusion and oil and energy prices remaining high and markets volatile as a result. Drivers facing record fuel prices and mortgage holders have borne the brunt of that volatility. Mortgage rates highest since 2023 Financial analysts Moneyfacts reported the average five-year fixed rate reaching 6% on Monday, October 5, its highest since September 2023. But on Tuesday there was a glimmer of light as residential mortgage lender Gen H announced it had reduced rates across its two, three and five-year fixed mortgage ranges following a fall in swap rates - the rates that banks charge each other for borrowing that have a major effect on fixed-rate mortgaes - with the largest cuts at 95% loan-to-value (LTV). These rates are already available to brokers on Gen H’s panel, it confirmed. The changes are: - 2-year fee-free products: down 14–30 bps at most LTVs from 60% to 95%, including 30 bps at 95% LTV - 3-year fee-free products: down 10–22 bps at most LTVs from 60% to 95% - 5-year fee-free products: down 7–12 bps at 90–95% LTV - Products with fees: down by up to 21 bps - Targeted increases: up to 13 bps across 85% LTV products and up to 16 bps across parts of the retention range At 60% LTV, the fee-free 2-year fixed is down 29 bps to 6.09% (6.8% APRC, £0 fee). Gen H's lowest rates for new customers - 60% LTV: 5.79% 2-year fixed (6.8% APRC, £1,499 fee) or 6.09% fee-free (6.8% APRC, £0 fee) - 70–80% LTV: 5.94% 2-year fixed (6.9% APRC, £1,499 fee) or 6.14% fee-free (6.8% APRC, £0 fee) - 85% LTV: 6.59% 5-year fixed (7.0% APRC, £1,499 fee) or 6.69% fee-free (6.9% APRC, £0 fee) - 90% LTV: 6.59% 5-year fixed (7.0% APRC, £1,499 fee) or 6.69% fee-free (6.9% APRC, £0 fee) - 95% LTV: 6.69% 5-year fixed (7.0% APRC, £1,499 fee) or 6.79% fee-free (7.0% APRC, £0 fee) Sara Palmer, chief distribution officer at Gen H, said: “Swap rates have come down ever so slightly and we're passing that on, with our biggest reductions for buyers with the smallest deposits. Many of our borrowers need the flexibility that our criteria and income booster give them, and these cuts make that borrowing more affordable.” Gen H's criteria aim to help borrowers who can be excluded from standard high street borrowing. These include first-time buyers, home movers and remortgagers who are constrained by affordability, as well as the self-employed, foreign nationals, Construction Industry Scheme (CIS) workers, zero-hours workers, contractors, borrowers with complex income, and those who need a higher maximum age. Its income booster allows additional people's income to count towards affordability, so buyers can borrow more than they could on their own income.