HSBC, Barclays and NatWest are among the main lenders cutting mortgage rates as experts say “things are looking a lot more optimistic” Bank of England will cut its base rate.
Interest rates remained relatively high due to the central bank’s decision to raise the UK’s key rate in its fight to moderate the rate of consumer price index (CPI) inflation.
Earlier this week, Barclays cut the cost of its fixed-rate home loans for new business on Tuesday, shortly after NatWest made similar rate cuts across its range of mortgage products.
HSBC has also cut interest rates on its mortgage offers from today, with many brokers expecting further cuts in the coming weeks.
Despite this, UK home owners and potential home buyers are still burdened by skyrocketing costs.
According to Moneyfactscompare, the average two-year fixed-rate mortgage has an interest rate of 5.96 percent.
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By comparison, the average five-year contract had a rate of 5.53 percent, with the standard variable sitting at a staggering 8.18 percent.
To date, HSBC has launched a range of reduced offers for residential and lettings rates over two, three and five-year terms for new and existing customers.
The high street bank will present a range of offers for periods of two, three and five years in different ratios for new and existing customers.
An HSBC spokesperson says: “We are firmly focused on helping customers on or up the property ladder.
“A number of factors are taken into account when setting mortgage rates and following a review we are cutting more than 300 mortgage rates across our residential and buy-to-let mortgages from tomorrow.”
On Monday (June 24), Barclays confirmed a rate cut of up to 31 basis points for home buyers, while NatWest announced it would cut rates by 71 basis points.
It comes shortly after the Bank of England confirmed it would hold its key rate at a 16-year high of 5.25 percent, which proved controversial among many analysts.
Earlier, 12-month CPI inflation fell to the bank’s desired target of two percent, but the central bank remains cautious about making any changes.
Experts are betting on a rate cut in the second half of the year, but some expect the Bank of England to take action at its next meeting.
Speaking to Newspage, Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said: “Summer is here and the sun is finally shining on borrowers who have been in the shadow of swap rates for too long. Things are looking much more optimistic and if the first rate cut happens in August, all bets are off.”
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John Charcol, technical manager of Nicholas Mendes mortgages, points out: “After last week’s MPC decision and with important wages data and general election results on the horizon, markets are likely to expect further cuts in bank rates.
“On Friday, the five-year cash rate was at 3.82 percent, suggesting that lenders certainly have room to cut five-year fixed rates further from their current levels.
“Interestingly, Sonia swaps last week held steady at 5.2 percent since May 7 – the longest stable period since the benchmark’s inception in 1997.”
The Bank of England’s Monetary Policy Committee (MPC) will issue its next policy rate announcement on 1 August 2024.