Mortgage price war continues as Leeds joins providers in dropping rates

Leeds has reduced the rates of its three and five-year fixed buy-to-let mortgages by up to 0.4 per cent.

The lender is also offering free standard valuations and fees assisted legal services for standard remortgages in the range.

Britain’s biggest mortgage lender Halifax and its sister bank Lloyds cut rates for their five-year fixed rates by up to 0.31 per cent.

It is the second round of reductions for Halifax, which last week announced a 3.98 per cent five-year mortgage rate and £995 fee for borrowers with a 20 to 25 per cent deposit.

September has seen an increasingly competitive market, as lenders including Metro Bank, Barclays, Nationwide Building Society, HSBC, Virgin Money, Skipton Building Society and Norwich and Peterborough Building Society jostle for business.

Experts put the slew of cuts down to falls in swap rates, which lenders use to price their loans.

Ray Boulger, senior technical manager at mortgage adviser John Charcol, said the reductions were also driven by some providers falling behind in lending targets, leading them to drop rates to attract further business. This, in turn, has caused a ‘chain reaction’ in the market, he said.

Despite the competitive market, borrowers who are tempted by the lower rate and fail to shop around could find themselves losing out on fees.

Mr Boulger said mortgage customers should continue to shop around and consider the best value deal over the whole life of the loan, including any fees or expenses.

The cuts come despite continued speculation over when the Bank of England base rate is likely to push up from its historic 0.5% low, increasing the cost of borrowing.