NatWest cuts mortgage rates – is now the time to remortgage?

NatWest is cutting rates a week after the Bank of England raised them, which tells you the hike was already priced into mortgages. Anyone remortgaging in the next six months could look at securing a deal now. Many lenders let you lock in a rate months before your current deal ends, and if prices fall further, a broker can often move you to a cheaper one before it starts. With one MPC member voting for 4.25% last week, waiting for bigger cuts is the riskier bet.

More of the lenders are starting to lower their rates now which is good news for borrowers especially following the predictions of further base rate rises and frankly a fair amount of economic negativity following the Budget. NatWest is lowering most of its fixed rates by up to 0.2% and will have a two-year fix and five-year fix at 4.87% with £1495 arrangement fees for homebuyers with a 40% deposit. Santander will also have more sub-5% fixes. There have not been many mortgage rate changes since the base rate hike, but they are starting to filter through in line with the funding cost decreases. The combination of hope that the war in Iran will stop, lower oil prices coming through and possible better inflation figures have improved five-year swaps as they are marginally below two-year swaps for the first time in a while. Halifax still has the standout two and five-year fixes for premier current account customers at 4.78% for borrowers with a 40% deposit with £999 fees.

With 2027 being a big remortgage year, lenders are keen to get those applications before Santa gets in his sleigh. Now that the budget is over and the base rate has increased, lenders will be positioning themselves to be as attractive as possible to remortgagers through rates and criteria.

The mortgage price war is gathering pace, with NatWest joining other lenders in cutting rates to compete for borrowers. If your mortgage deal is ending in the next six months, now is the time to start looking, but don't become obsessed with waiting for the perfect rate. Rates may fall further, but markets can change quickly. Likewise, first-time buyers shouldn't automatically spend another year saving for a 10% deposit if they can comfortably buy with 5% today. A bigger deposit usually means a better deal, but the house you want may not wait. Mortgage rates are nudging in the right direction, they're just not travelling there in a straight line.

NatWest cutting rates on 196 deals is encouraging, particularly for remortgage customers with substantial equity.

But don't mistake selective cuts for a guaranteed downward trend. Lenders are competing for specific business, and pricing reflects funding costs and risk appetite.

Anyone approaching the end of a fixed deal should review options now rather than gamble on cheaper rates later. Secure a deal and review alternatives if rates improve.

A 5% deposit gets buyers onto the property ladder sooner, but comes with higher rates and less equity protection. Waiting to save more isn't always better if property prices rise meanwhile.

Buy-to-let is different. Rental yields, portfolio risk and lender appetite all influence pricing.

My message is simple: stop obsessing over the headline interest rate. Look at the actual cost of borrowing, including fees, over the period you're keeping the mortgage.

It’s always best to secure your next rate as soon as you can because rates, as we have seen, are volatile. The general feeling is that the rate rises have been priced in and what we are seeing now is an expectation of only perhaps one more rate rise, but always lock in as soon as possible because you can always change if rates continue to go down. This is the reason lenders are cutting. They’re looking 3-6 months ahead and aren’t seeing a reason for further rises beyond perhaps one 0.25% rise. However the hot inflation numbers in the US may suggest we aren’t out of the woods yet. Buying with 5% is still generally a good option rather than waiting, if the choice is between that and renting but those living at home and able to save may be advised to do this for as long as they can. BTL rises are priced differently, in a different market, but what we may be seeing here is a commercial decision by NatWest to price themselves out if they are focused more on the residential market.

For someone who used bridging finance to buy a property and refurbish it, a more competitive mortgage deal could help them complete the next stage: repay the short-term funding and move onto a longer-term mortgage.

The timing matters. Waiting for a slightly cheaper mortgage while continuing to pay bridging interest can cost more than it saves. Once the property is ready and suitable refinancing is available, it’s worth comparing the cost of moving now with the cost of waiting.

We often focus on how quickly a bridging loan completes. Mortgage pricing matters at the other end of the transaction too.

Trying to catch the very bottom of the mortgage market can become an expensive waiting game. If your deal ends within six months, now is a sensible time to review your options. Compare your existing lender with alternatives and factor in fees and any early repayment charges.

Lenders adjust pricing according to funding costs, competition and the business they want to attract. These cuts are welcome, but they are no promise that the next move will also be down.

For buyers with a 5% deposit, saving more could unlock cheaper deals, but waiting has costs too, particularly if you are paying rent. The decision needs to balance affordability, savings left after completion and how long building a bigger deposit would take.

The buy-to-let increase shows why a headline about rate cuts never tells the whole story. Lenders price different parts of their range differently. For landlords especially, a tempting rate attached to a hefty fee can be a false economy. Always compare the total cost.