January 23: UK Mortgage Rates Fall as NatWest, Halifax Lead Price Cuts
UK mortgage rates are falling after NatWest and Halifax cut fixed deals, with the cheapest fixes around 3.5%. Nationwide also widened access to up to six times income loans for select borrowers. The moves follow the Bank of England’s recent rate cut and growing competition for 2026 buyers. We explain what changed, how much typical repayments may drop, and what this means for bank margins and housing activity. We also share practical steps to secure a better deal today. Our focus is on UK mortgage rates and clear, data led choices.
What Changed Today
NatWest mortgage rates and Halifax fixed rates were cut across popular two and five year fixes, signalling sharper competition for new borrowers. Selected rates were trimmed for purchase and remortgage ranges, with pricing directed at lower loan to value bands. Lenders are reacting to cheaper funding and a recent Bank Rate move, according to source. For many, UK mortgage rates now look more attractive than late 2025 levels.
Brokers report headline five year fixes from about 3.5% for top tier borrowers with strong equity, while two year fixes sit a little higher. That aligns with the latest round up from MoneySavingExpert’s broker panel source. UK mortgage rates still vary widely by loan to value and fees, so the true cost can differ even when headline rates look similar.
Borrower Impact and Timing
A lower coupon helps monthly cash flow. On a £250,000 loan over 25 years, a move from 4.1% to 3.6% on a five year fix cuts payments by roughly £65 a month by our estimate. Gains are larger at high balances. Savings depend on loan to value bands, with the biggest falls seen at 60% to 75% LTV as UK mortgage rates sharpen first there.
If your deal ends within six months, consider getting a new offer now and keep watching rates. Many lenders allow a rate switch without fee before completion. Brokers say this protects you if pricing rises but lets you move down if it falls. The call depends on risk tolerance, UK mortgage rates outlook, and your timeline.
Bank Margins and Market Sentiment
Aggressive pricing tightens lender margins, especially if swap rates do not fall in step. Banks may try to offset by cross selling, tighter criteria, or focusing on lower risk loans. If pricing drops faster than deposit costs, near term net interest income can ease, although stronger volumes later in 2026 could help.
Lower pricing and wider borrowing capacity should support approvals, especially for movers who were close to passing affordability. Nationwide six times income availability for select cases can lift budgets at the margin. UK mortgage rates are only one part of demand. Wage growth, supply, and confidence will guide how quickly agreed sales convert to completions.
How to Get the Best Deal
Always compare the total cost. A 3.59% fix with a £1,495 fee can be pricier than a 3.79% fee free deal on smaller loans. Watch cashback, free valuations, and legal offers. Calculate cost over the fixed term you will actually keep. Low fee deals often win at lower balances.
High loan to income options are not for everyone. Even with up to six times income at Nationwide for select, low risk borrowers, you should stress test payments. Build a buffer for bills and savings. If UK mortgage rates fall further, you can still benefit at the next refinance without stretching too far today.
Final Thoughts
Today’s cuts from NatWest and Halifax mark a clear shift for borrowers as UK mortgage rates soften after the recent Bank Rate move. The cheapest fixes near 3.5% will not suit everyone, but they set the tone for spring pricing. For households, lower payments can support budgets and improve move plans. For banks, sharper pricing can compress margins now, yet a livelier pipeline in 2026 may balance the effect. Our take is simple: act, do not rush. If your fix ends within six months, secure a no fee offer and keep tracking changes. Compare the full cost, not just the headline rate, and check your loan to value. Consider whether higher loan to income borrowing is truly needed. Rates could ease further, but availability and criteria also matter. Speak to a whole-of-market broker, line up an agreement in principle, and watch swap rates and lender pipelines before you commit.
FAQs
Why are UK mortgage rates falling today?
Lenders are competing for early 2026 business after the Bank of England’s recent rate cut reduced funding costs. NatWest and Halifax trimmed fixed deals, and brokers report five year fixes from about 3.5% for top tier borrowers. Pricing still depends on loan to value, fees, and applicant risk.
Should I lock a fixed rate now or wait?
If your deal ends within six months, consider securing an offer now and monitor rates. Many lenders let you switch to a cheaper product before completion without a fee. This protects you if pricing rises while keeping downside optionality. Check true costs and any valuation or legal timelines.
What does Nationwide six times income mean for borrowers?
Nationwide has widened access to loans up to six times income for select, low risk applicants. It can boost borrowing power for strong profiles, but higher leverage raises risk if rates rise or incomes change. Assess affordability carefully, consider buffers, and avoid stretching if a lower multiple meets your needs.
How could these changes affect UK banks and housing activity?
Lower prices can squeeze bank margins if deposit costs lag, but stronger volumes later in 2026 may offset. Cheaper borrowing and broader affordability should aid approvals and agreed sales. The scale depends on wage growth, supply, and confidence, not only on rates. Expect a gradual rather than instant rebound.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
