Mortgage rates finally fall for first-time buyers – best deals compared

First-time home buyers and those with smaller deposits have received welcome relief after mortgage rates finally began to fall.

Nationwide, HSBC and NatWest cut their fixed rates on Friday amid “frenetic” competition between big-name mortgage providers. TSB did so for the second time in a week in a rare move.

TSB says its rates will start from 3.79 per cent - close to the lowest rate on the market, currently offered by NatWest at 3.77 per cent.

Nationwide and Clydesdale banks now both offer rates close to 5 per cent for those buying a home with a 5 per cent deposit.

Clydesdale is offering a 5.02 per cent five-year fix with a £999 fee, while Nationwide’s is 5.04 per cent following rate cuts of 0.25 per cent.

Those likely to benefit the most from the latest wave of cuts are first-time buyers and home movers who are buying with smaller deposits.

However, the best rates are commonly reserved for those borrowing a small proportion of the value of the home - known as loan-to-value.

A few are at levels not seen since rates shot up following the mini-budget in the short-lived premiership of Liz Truss in September 2022.

Emma Jones, managing director at broker When The Bank Says No told the BBC: “Momentum is really starting to build now and the cuts are coming thick and fast.

“Borrowers are the winners as lenders seek to compete for all-important market share as we head into the final months of the year.”

Izabella Lubowiecka, senior property researcher at Zoopla, said: “With just two months to go, those looking to purchase their first home should act this autumn if they are to avoid paying more in stamp duty, particularly if they are looking to purchase a home in southern England, an area where first-time buyers are likely to see a sizable increase in Stamp Duty Land Tax once the changes come into effect next April.

“Those not looking to purchase until after April 1, should make sure they build the additional stamp duty fees into their plans and account for it in their overall budgets.”

Mortgage rates have been edging down after a cut to the Bank of England base rate in August, and mortgage approvals to home buyers are up.

The bank’s figures recently showed the number of mortgage approvals made to home buyers jumped in July to 62,000 – the highest level seen since September 2022.

Some economists have predicted mortgage approvals could edge higher in the next few months, as mortgage rates continue to ease back.

House prices also look to be rising for the first time in almost two years, according to surveyors.

August marked the first time since October 2022 that a key metric of price growth moved into the green, the Royal Institution of Chartered Surveyors (RICS) said.