A fresh mortgage price war has broken out with a string of major lenders slashing their rates in recent days.

New homes by Bellway

New homes by Bellway - Credit: Archant

Fresh mortgage price war breaks out

Metro Bank, Halifax, Barclays, Nationwide Building Society, HSBC, Virgin Money, Skipton Building Society and Norwich and Peterborough Building Society are among those who have sharpened up their ranges.

The tussle for homeowners’ business has seen several lenders once again drop their rates below 3% for people looking for a five-year fixed rate mortgage.

Meanwhile, Virgin Money has taken the unusual step of launching a new range which allows people to fix in for one year longer than the usual five-year deals and protect themselves against the prospect of interest rates rising for a prolonged period.

Virgin’s new six-year fixed rate deals, which are available at the same price as its five-year fixes, include a product available for people with a 30% deposit with a rate of 2.99% and a fee of £995. Alternatively, people can opt to go fee-free and pay a higher rate of 3.59%.

Metro Bank also slashed its five-year fixed rates today. The new products, which carry a fee of £999, include a five-year fix at 2.99% for someone with a 40% deposit and one at 3.79% for a borrower with a 15% deposit to put down.

The announcements came as Norwich and Peterborough Building Society unveiled a 0.20% interest rate reduction on first-time buyer deals.

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The society has shaved a fee-free two-year fixed rate deal for people aspiring to get on the property ladder down from 5.19% to 4.99%, as well as chopping product rates for people with 25% and 35% deposits.

Across the market, someone with a 10% deposit to put down and looking for a five-year fixed rate mortgage would have found the average rate was 4.98% at the start of the month, but this has now dropped to 4.92%, according to financial information website Moneyfacts.

Over the same period, the average two-year fixed rate on offer for someone with a 10% deposit has decreased from 4.38% to 4.31%.

Moneyfacts said new deals of note also include a 3.84% two-year fix from Halifax for people with a 15% deposit with a £265 fee. A month ago, the rate was 4.14%. It also highlighted a two-year fix from Woolwich for people with a 30% deposit.

The mortgage battle may seem surprising as it comes at a time when speculation has been mounting over the prospect of the Bank of England base rate moving off its historic 0.5% low, pushing up costs for borrowers.

Minutes released by the bank showed that its Monetary Policy Committee (MPC) has been split over interest rate policy for two months in a row.

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