Four major banks have recently reduced the interest rates on their mortgage products to kick off the new year. Following a cut in the Bank of England base rate from 4% to 3.75% in December, many mortgage lenders have been adjusting their rates downward.

Lloyds Bank is now offering the lowest homebuyer mortgage rate on the market at 3.47% for Club Lloyd customers with a 40% deposit, fixed for two years, and accompanied by a £999 fee. Halifax is also in the mix, providing a two-year fixed rate mortgage at 3.74%.

Barclays has introduced a two-year fixed rate mortgage at 3.57% with an £899 product fee for those with a 40% deposit. Additionally, there is a 3.78% two-year fixed rate for homeowners looking to remortgage with 25% equity in their property, which includes a £999 product fee.

HSBC offers a 3.78% deal with a £1,008 fee and a 3.56% two-year fixed rate with a £999 product fee for customers with a 40% deposit. The average two-year fixed residential mortgage rate currently stands at 4.80% based on Moneyfacts data.

David Fell, lead analyst at Hamptons, noted that the consistent decline in mortgage rates is attracting more buyers back into the market. He emphasized that even a slight drop in rates can alleviate concerns about broader economic challenges, with the potential for further rate decreases if inflation surprises on the downside.

For mortgage holders, understanding the type of mortgage deal they have is crucial. Tracker mortgages follow the Bank of England base rate, while standard variable rate (SVR) mortgages can change at any time. Fixed-rate mortgages involve paying a set amount each month for a specific period.

As mortgage rates continue to fluctuate, homeowners are advised to review their options, compare rates, and seek advice from a mortgage broker before making any decisions. Lenders typically allow borrowers to secure a new deal about three months before their current one ends. It’s also important to check for any potential fees before switching to a new rate.