UK’s major lenders announce further cuts to fixed-rate mortgage products

UK’s major lenders announce further cuts to fixed-rate mortgage products- only those that hold around 40% of a deposit will be positively affected by the changes

Three of the UKs largest mortgage lenders HSBC, Nationwide and Santander have begun cutting their mortgage rates this week in a bid to help those onto the property market. HSBC has slashed its rates by up to 0.4%, while Nationwide has cut rates between 0.03% to 0.3%. In parallel, Santander has implemented rate cuts of up to 0.2% for selected products. In light of this news, Shahram Shaida, CEO of home buying and property investment platform, Allbricks, discusses why more needs to be done to help Brits who are coming to an end to their fixed-rate mortgage in 2024, and why Allbricks, a revolutionary new form of home buying and investment platform can remedy the spiralling cost of homeownership.

While initially welcomed, these rate cuts have limited impact on affordability, primarily benefiting those with substantial down payments. Notably, Nationwide offers a 5.39% five-year fixed rate, fee-free, for customers moving homes with a minimum 40% deposit. Similarly, Santander’s most affordable deal is a 5.2% five-year fixed rate, aimed at home movers with a 25% minimum deposit. Amidst a cost-of-living crisis and inflation, saving for a sizable deposit has become increasingly challenging, rendering rate reductions largely ineffective for most.

As interest rates remain concerningly high, 1.6 million households with fixed mortgage deals are set to expire this year. While homeowners who hold a fixed-rate mortgage will not witness an immediate change in their monthly payments, those looking to remortgage face a sharp rise in repayments once they move on to a new deal. The failure of Britain’s major lenders to substantially cut their interest rates this week will add further strain to Brits’ financial woes. This comes after data from Halifax showed that property values declined for a fourth month in a row by 0.3% in July – with the affordability of mortgages being attributed as the main factor for this drop, highlighting the need for an alternative method of homeownership.

This is where Allbricks can help. By offering an alternative to mortgages, the company is actively working to combat the displacement of individuals and families from their communities. As well as breaking down barriers for homeowners amidst the current housing crisis, Allbricks also provides a unique opportunity for investors to do social good on their doorstep, investing in their local community and helping more people to get on the housing ladder.

A new model of Homeownership

Allbricks believe that affordable and accessible housing should be a right, not a privilege. The platform offers a fresh approach by allowing a diverse range of investors to co-invest in properties starting from £10,000 or 1% of the property’s value. Qualified investors become part-owners and pay rent on the remaining portion, which serves as a dividend for investors.

With Allbricks’ model standing at 32% more profitable than buy-to-lets, this could lead to a new wave of investment and regeneration in communities in need across the UK.

Shahram Shaida, CEO and founder of Allbricks, comments on the issues that Allbricks aims to address:

“I founded Allbricks to put the fading dream of home ownership back within reach. After personally experiencing how broken the current rental, mortgage and home buying process is, I decided to make it my life mission to solve the global housing crises and reverse the fading dream of home ownership. The UK has ended up with Generation Stuck.

“People are stuck at home unable to move out, stuck renting while they save for a deposit, stuck in properties that don’t fit their needs, and even stuck with mortgages that don’t work. We have the opportunity and the solution to change this trend. Most of us have two options: rent or get a mortgage. The problem is that for a vast majority of the population, mortgages require unaffordable deposits and interest rates. The traditional mortgage represents an antiquated, outdated model that isn’t really fit for purpose for many UK home buyers anymore. With rising interest rates, the cost of living, and even the increasing number of people who are choosing to be self-employed, we need and deserve a better solution.

“Allbricks, has uniquely unitised residential property to democratise wealth creation through home ownership. By removing the mortgage model and creating a crowdfunding type of approach, we’ve made something better than a mortgage for home buyers, better than a buy-to-let for investors and creating new unique investment opportunities for institutional investors.”

Kindly shared by Allbricks

Picture Courtesy of Adobe Stock