In a significant move reflecting the dynamic nature of the UK’s mortgage market, several major lenders—including Halifax, Coventry Building Society, The Co-operative Bank, The Mortgage Works (TMW), and TSB—have announced reductions in their fixed mortgage rates. These changes, effective from May 1, 2025, aim to offer more competitive options for borrowers amid shifting economic conditions.
Key Rate Reductions Across Lenders
Halifax
Halifax is set to lower selected homebuyer, first-time buyer, and remortgage fixed rates by approximately 0.34%. Notably, the two-year fixed rate at 60% loan-to-value (LTV) with no fee will decrease to 4.51%, while the five-year fixed rate at the same LTV will drop to 4.19%. These adjustments are part of Halifax’s broader strategy to remain competitive in a fluctuating market.
Coventry Building Society
Coventry Building Society will reduce selected residential and buy-to-let (BTL) rates. For residential products, all fixed rates for new and existing borrowers between 65% and 85% LTV will see cuts. In the BTL segment, new borrower fixed rates at 65% LTV and all limited company BTL deals will be lowered. Existing BTL borrowers with fixed rates from 50% to 65% LTV will also benefit from these reductions.
The Co-operative Bank plans to cut selected new business residential and retention rates by up to 0.08%. Specifically, two-year fixed remortgage products at 60-75% LTV will see decreases, enhancing affordability for borrowers seeking stability in their repayments.The Guardian
The Mortgage Works (TMW)
TMW will lower selected two- and five-year fixed rates across its BTL, limited company, and let-to-buy ranges. For instance, the BTL two-year fixed rate for purchase and remortgage at 65% LTV with a 3% fee will fall to 2.99%, marking the lender’s lowest headline rate in nearly three years. Similarly, the five-year fixed rate at the same LTV will decrease to 3.74%.
TSB
TSB is implementing rate reductions of up to 0.25% across various mortgage products. This includes residential, BTL, product transfer, and additional borrowing deals. Notably, two- and five-year fixed first-time buyer and homemover deals at 90% and 95% LTV have been reduced by up to 0.15%, providing more accessible options for those entering the property market.
Market Dynamics and Implications
These rate reductions occur against a backdrop of increasing competition among lenders, driven by expectations of multiple Bank of England base rate cuts in response to global economic uncertainties. The anticipation of a potential “full-blown rate war” has led to a flurry of activity, with lenders vying to offer the most attractive deals to consumers.
While lower interest rates present opportunities for borrowers, experts caution that some deals may come with higher fees, potentially offsetting the benefits of reduced rates. For example, a mortgage with a lower interest rate but higher fees could ultimately be more expensive over the term of the loan compared to a slightly higher rate with lower fees. Therefore, borrowers are advised to consider the total cost of a mortgage, including fees and other charges, rather than focusing solely on the headline interest rate.The Sun
Additionally, the easing of affordability rules by some lenders, such as Halifax and Lloyds Bank, has increased borrowing capacity for many consumers. By lowering stress test rates, these institutions enable borrowers to qualify for larger loans, potentially enhancing their purchasing power in a competitive housing market.The Guardian
Conclusion
The recent wave of fixed mortgage rate reductions by major UK lenders reflects a highly competitive environment and a response to broader economic trends. While these changes offer potential savings for borrowers, it’s crucial to assess the overall cost of mortgage deals, considering both interest rates and associated fees. As the market continues to evolve, staying informed and seeking professional advice can help consumers make decisions that align with their financial goals.
Sources:
- Mortgage Solutions: Halifax, Coventry BS, Co-op Bank, TMW and TSB lower fixed rates – round-up
- The Sun: Mortgages drop below 4% as lenders launch ‘full blown rate war’ on fixed home loansThe Sun+2The Sun+2The Sun+2
- The Guardian: HSBC and Co-op Bank cut mortgage rates as Halifax and Lloyds ease rulesThe Guardian
- Financial Times: Barclays joins other lenders to cut mortgage rate below 4%
