Three major lenders have cut their mortgage deals ahead of the Bank of England’s widely expected interest rate cut next week.

The average rate for a two-year fixed mortgage edged up slightly to 4.58% from 4.55% last week, according to data from Uswitch. The average five-year fixed deal also ticked up to 5.04% from 4.84%. Those are the average rates across all lenders for a 75% loan-to-value (LTV) mortgage, meaning buyers need to have at least 25% for a down payment.

UK inflation fell for the first time in five months, slipping to 3.6% on an annual basis, raising hopes that the Bank of England (BoE) will cut interest rates on December 18 from 4% to 3.75%. The central bank’s base rate influences those set by lenders, so another rate cut would be welcome news for mortgage borrowers.

Meanwhile, the autumn budget unveiled measures that could impact UK homeowners. A mansion tax on properties valued over £2m will add an annual surcharge starting at £2,500, rising to £7,500 for homes worth more than £5m, and is set to take effect in April 2028.

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Rachel Springall, of Moneyfacts, said: “Mortgage rates continue on the downward trend and November was particularly fruitful for fixed rate cuts.

“The re-pricing by lenders led to the average five-year fixed rate dropping below 5% for the first time in over two years and sits at its lowest point since before the ‘mini-budget’ in September 2022, alongside its two-year counterpart.”

Jack Tutton, of brokers SJ Mortgages, said: “The market is hotting up due to the strong prediction of a Bank Rate cut before Christmas and potentially more cuts to come in 2026.”

“Mortgage holders will be hoping that these cuts are a gift that keeps on giving and more reductions from more lenders will follow.”

NatWest (NWG.L), Halifax (LLOY.L) and Nationwide have trimmed pricing on some of their cheapest mortgage deals. Here’s more detail on major lenders’ mortgage rates this week:

HSBC (HSBA.L) has 3.66% for a two-year deal, with £999 booking fee, which is unchanged from last week. For those with a premier standard account with the lender, this rate is 3.63%.

Looking at the five-year options, the fixed standard rate is 3.88% with a £999 fee, which is also unchanged.

Both cases assume a 60% LTV mortgage, meaning buyers need to have at least 40% for a deposit.

HSBC (HSBA.L) offers 95% LTV deals, meaning you only need to save for a 5% deposit. However, the rates are higher, with a two-year fix at 4.84% or a five-year fix at 4.77%.

This is because their financial situation and deposit size determine the rate someone can get. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.

The lender this week has moved to sharpen its appeal to first-time buyers, unveiling a cashback offer of up to £2,000 in a bid to ease the upfront costs of entering the housing market.

The bank’s enhanced incentive package, which brokers say could ignite a fresh round of competitive pricing among high-street lenders, marks one of the most generous cashback schemes currently available. The measure is aimed at supporting borrowers struggling with deposit and moving costs at a time when affordability pressures remain high despite a recent easing in mortgage rates.

NatWest’s (NWG.L) two-year deal is 3.62% with a £1,495 product fee, which is lower than last week’s 3.71%.

The cheapest five-year fixed deal comes in at 3.75%, which is lower than last week’s 3.83%. In both cases, you’ll need a deposit of at least 40% to qualify for the rates.

Barclays (BARC.L) has a two-year fix that comes in at 3.63% with a £899 product fee, which is unchanged from the previous week. The five-year deal remains at 3.82%.

Barclays (BARC.L) has launched 95% loan-to-value (LTV) mortgages for purchasers of new-build houses, in a move aimed at easing the path to home ownership, especially for those entering the market for the first time.

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The new offering applies to new build houses with a maximum purchase price of £600,000. Previously, buyers needed a 10% deposit, meaning a £60,000 deposit on a £600,000 property. Under the new criteria, that requirement could be halved to £30,000.

Earlier in the year, Barclays (BARC.L) launched a mortgage proposition to help new and existing customers access larger loans when purchasing a home.

The initiative, known as Mortgage Boost, enables family members or friends to effectively “boost” the amount that can be borrowed toward a property without needing to lend or gift money directly or provide a larger deposit.

Under the scheme, a borrower’s eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, Barclays (BARC.L) said that an individual with a £37,500 annual income and a £30,000 deposit would be able to borrow up to £168,375, meaning the most they could afford would be a home worth £198,375.

However, with Mortgage Boost, the total borrowing potential can increase if a second person, such as a parent, is added to the application. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.

Nationwide (NBS.L) has a two-year fix set to come in at 3.83%, unchanged from the previous week. For a five-year deal, the rate has dropped to 4.04% from 4.08%. Both deals require a 40% deposit and come with a £999 upfront fee.

Eligible first-time buyers can apply for a mortgage with a minimum salary of £30,000 and joint applicants with a combined salary of £50,000. This is expected to support an additional 10,000 first-time buyers each year.

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The vast majority of Nationwide’s (NBS.L) high loan-to-income (LTI) lending is conducted through its Helping Hand, which enables eligible first-time buyers to borrow up to six times their annual income. This enables borrowing of up to 33% more than the standard lending amount.

The lender also adjusted its mortgage affordability calculation by reducing stress rates in May by between 0.75 and 1.25 percentage points, helping applicants borrow more, whether buying a first home, moving, or remortgaging.

Applicants can borrow, on average, £28,000 more; however, in some remortgage cases, customers may be able to borrow up to £42,600 more.

Halifax, the UK’s largest mortgage lender, offers a two-year fix of 3.82% (also 60% LTV), which is lower than last week’s 3.99%.

The lender, owned by Lloyds (LLOY.L), offers a five-year rate of 3.98%, which remains untouched.

It offers a 10-year deal with a mortgage rate of 4.87%.

Santander (BNC.L) withdrew its 60% LTV mortgage products for first-time buyers on borrowing of less than £250,000 on two- and five-year terms on 19 September.

A spokesperson for the bank said that the “change was part of a reprice following the changes to swaps after the Bank of England held interest rates”.

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Santander (BNC.L) continues to offer products with LTVs of 85% and above for first-time buyers, with the cheapest two-year fix coming in at 4.06% or 4.19% for a five-year deal.

For home movers with a 40% deposit, Santander (BNC.L) is now offering a two-year fixed rate of 3.51% and a five-year deal of 3.72%.

NatWest (NWG.L) is now offering the most competitive deals on the market for first-time buyers, with a two-year fixed rate of 3.62% and 3.75% for a five-year fix. However, both require a hefty 40% deposit.

A growing number of homeowners in the UK are opting for mortgage terms of 35 years or longer, with a significant rise in older borrowers stretching their repayment periods well into their 70s.

Meanwhile, Skipton Building Society is allowing first-time buyers to borrow up to 5.5 times their income, helping more borrowers get on the housing ladder.

Leeds Building Society reduced the minimum household income requirement on its first-time-buyer mortgage range. This means single or joint first-time buyer applicants with a household income of £30,000 may now be able to borrow up to 5.5 times their earnings.

Mortgage holders and borrowers have faced higher repayments in recent years, as the BoE’s higher base rate has been passed on by banks and building societies.

Many homeowners will hope the Bank of England continues to cut interest rates. At the same time, savers will likely root for rates to remain at or near their current levels.

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