The cheapest mortgage on the market has been pulled from sale after just two days.
The Co-operative Bank announced last Friday that it was launching a new market-leading five-year mortgage at a rate of 3.89 per cent, with an even cheaper rate of 3.84 per cent available for those taking out a loan of £750,000 or more.
The mortgages both launched on Tuesday, but the bank has now told brokers they will be pulled by 5pm today.
In a statement online it said: “By 5pm on Thursday 11 January, 2024 we will temporarily withdraw the majority of our fixed-rate products for new business.”
Aaron Strutt of brokers Trinity Financial said: “The Co-operative Bank has been extremely busy following the launch of its best-buy deals. This goes to show that it is worth grabbing cheap rates while you can and swapping to lower rates if and when they are available.”
Now, a 3.94 per cent five-year mortgage from Santander is now the cheapest five-year deal on the market.
Lenders had been slashing their rates last week as they attempted to attract new business.
But brokers had warned that an uptick in swap rates, which determine fixed-rate mortgage pricing, meant that some deals, especially from smaller banks with tighter margins, were unlikely to stick around for long.
Andrew Montlake, of Coreco Mortgages told i: “It is important to not get too carried away with recent rate reductions and assume they will continue apace without pause.
“We may well see the pace of change slow to a plateau in the next few weeks.”
On Tuesday, Barclays and Santander became the latest mortgage lenders to cut rates on their loans, with the former unveiling the cheapest two-year fixed rate on the market.
But David Hollingworth of L&C Mortgages said: “I think rates will still keep coming down for now, but we may see the cheapest deals get used up quickly and pulled. If rates stay a bit higher, then there may not be deals taking their place, so we could see prices temporarily elevate.”
Brokers have suggested that those with mortgage rates expiring soon may be best-placed locking in a deal now, in case rates rise.
Justin Moy of EHF Mortgages said: “There has been more of a trend recently of borrowers holding out and not being so urgent to take a deal, having seen the recent frequent rate cuts. We always recommend taking a new deal as soon as possible.”
Mortgage rates are still expected to fall long term, but they will not reach the lows seen during the Covid pandemic, when the Bank of England base rate was as low as 0.1 per cent.
