Lenders launch new price war as rate hike threat recedes

Lenders have launched another round of "best ever" mortgage rates as the prospect of a Bank of England base rate hike recedes further into the distance.

On Thursday the Bank's monetary policy committee kept rates frozen at 0.5% for the 78th month in a row.

Analysts now say the next interest rate hike will be pushed back until well into 2016 or even 2017 as UK growth slows.

Almost simultaneously Barclays, Tesco and Yorkshire Building Society announced another flurry of mortgage rate cuts.

Barclays is launching a new three-year fixed rate charging 2.72% to 85% LTV, with a £999 fee.

It is also reducing four of its fixed-rate products and 10 buy-to-let mortgage deals.

Deals include a two-year fixed rate charging 2.09% to 85% LTV and a five-year fix at 3.19% to 85% LTV, both with a £999 fee.

Craig Calder, director, Mortgages at Barclays, said: “This is one of the lowest rate changes we’ve made this year so far, offering better rates for those customers with a smaller deposit as well as helping them to keep down the repayments for their property.

“We’re also committed to the buy-to-let market and our new rates across 60% & 75% LTV are the lowest we have ever offered.”

Yorkshire has launched a two-year fixed rate for borrowers with a 5% deposit at a rate of 3.98%.

The mortgage is aimed at first-time buyers and has an £845 product fee. There is an offset equivalent charging 4.28%.

The society has launched other changes, including cutting its three-year fixed rates for borrowers with 15% deposits.

Brendan Gilligan, product manager at Yorkshire Building Society, said: “We’re very proud to be offering a sub-4% mortgage for borrowers with a 5% deposit and hope that this will help as many people as possible take their first step onto the housing ladder.”

Tesco Bank is cutting the rates on a selection of its two-year and five-year mortgage products.

Highlights include a two-year fix charging 2.39% to 90% LTV, with a £1,300 product fee.

It is also launching two five-year fixed rates, one charging 2.69% to 80% LTV and the other charging 2.89% to 85% LTV, both with a £1,300 product fee.

Tesco Bank managing director David McCreadie said: “We are pleased to launch our new two-year and five-year fixed rate mortgage products which are among the most competitive on the market.”