Mortgage market cheered by return of sub 4% fixed rate deals from Barclays and Santander

Barclays and, Santander, all among the biggest players in the mortgage sector, marked the return of sub-4% lending for the first time since November.

Barclays unveiled rate cuts across its mortgage range from today, including a 3.99% 5-year fixed-rate home loan for borrowers with a deposit of at least 40%.

Meanwhile from tomorrow Santander will offer 3.99% two and five year deals on purchases and remortgage - but, again, only for applicants with the biggest deposits.

It is the first time this year that borrowers have been able to access money at below 4%. A jump in gilt yields during the “mini-crisis” in January forced fixed mortgage rates higher but with calm returning to the money markets yields in recent week have drifted back down again.

This in turn has allowed mortgage lenders to access cheaper funds through the City’s swaps market.

Aaron Strutt, product and communications director at brokers Trinity Financial said: “ It is great to have sub-4% fixed rates available again because they really are the new benchmark for cheap mortgages.

“There is clearly a need for more competitively priced rates with so many first-time buyers keen to get on the property ladder this year and a reported 1.8 million homeowners needing to remortgage. If Santander can launch 3.99% fixes then other lenders can do it too, so this is hopefully the start of the much anticipated price war.

“It seems like the recent base rate cut has helped to nudge rates down which is good news for borrowers.”

Simon Gammon, managing partner at Knight Frank Finance, said: "This is about competition and confidence. Swap rates haven't moved much since the Bank's decision to cut the base rate last week, but the lenders are clearly growing more confident about the direction of travel when it comes to the borrowing costs. Two members of the Monetary Policy Committee voted for a 50 basis point cut, which was unexpected, and the economy is on the brink of recession.

"Lenders are using the moment to get ahead of competitors and build a little market share. It's been a disappointing few years and all the banks are hoping that 2025 will be the year that the pace of the recovery picks up."