Major mortgage lenders in the UK have announced significant reductions in mortgage interest rates, expanding options for borrowers seeking rates below the 5% threshold.

First Direct, a part of HSBC UK Bank PLC, has introduced interest rate cuts of 0.40 percentage points, effective from Tuesday.

Halifax, a part of Lloyds Banking Group PLC, has also declared mortgage rate cuts of 0.46 percentage points, starting from Wednesday.

This includes a decrease in five-year fixed interest rates for borrowers with a 10% down payment by 0.24 percentage points, bringing it to 4.97%.

For borrowers with a 40% down payment, Halifax has reduced the five-year fixed interest rate by 0.20 percentage points to 4.53%. Both Halifax deals come with a fee of GBP 999.

HSBC UK is anticipated to announce its own reductions in large-scale mortgage rates on Wednesday, with details yet to be revealed. First Direct claims that this is the most significant mortgage interest rate cut since February of this year. Additionally, First Direct has introduced two new mortgages for borrowers with a 5% down payment.

For those seeking a five-year fixed interest rate with a 40% down payment, First Direct now offers an interest rate of only 4.74% for both new and existing customers.

Liam O’Hara, head of mortgages at First Direct, stated, “After today’s interest rate cuts, several of our mortgage products are now priced below 5%. Our switching rates have also been significantly reduced to ensure that existing customers have competitive options when they want to take out a new mortgage.”

He added,

“We also strive to make more products available for people who want to step on the ladder with a smaller deposit. That is why today we are also launching new products in the 95% LTV (loan-to-value) space.”

Recent increases in the Bank of England’s base interest rate have halted after 14 consecutive increases.

According to data from the financial information website Moneyfacts, the average mortgage interest rate for homeowners with a fixed maturity of two years was 6.21% on Tuesday morning, down from the average rate of 6.22% on Monday.

For five-year fixed-rate homeowners, the average mortgage interest rate was 5.80% on Tuesday morning, a decrease from the average rate of 5.81% on Monday.

James Hyde, a spokesman for moneyfactscompare.co.uk, mentioned that Nationwide Building Society and Virgin Money UK PLC were also among the lenders that lowered their mortgage interest rates.

Lewis Shaw, director at Shaw Financial Services, commented, “Halifax, who is once again in battle and lowers interest rates close to 4.5%, will certainly drive the cat between the pigeons. Hopefully, this will add some momentum to the market, and other lenders will tighten their pencils or risk losing it.”

In trading on Tuesday afternoon, HSBC stocks were 0.5% lower, Lloyds Banking shares were 0.9% lower, and Virgin Money UK stocks traded 0.1% lower in London.