HSBC, Barclays and Yorkshire BS have recently cut mortgage rates

Another three mortgage lenders have announced they are cutting mortgage rates, in a further downward move for home loan costs.

Barclays, HSBC and Yorkshire Building Society have all cut their rates Santander and Halifax earlier this week.

Yorkshire BS has cut mortgage rates by up to 0.2 percentage point.

Both HSBC and Barclays rate changes mean they offer some of the lowest interest rates on the market.

HSBC is offering a 4.39 per cent five-year fix to those remortgaging with at least 40 per cent equity in their home. The deal comes with a fee of £998.

For those buying with a 25 per cent deposit, HSBC is now offering the lowest rate on the market.

Its 4.37 per cent five-year fix comes with a £649 charge. Someone buying with a £200,000 mortgage paid over 25 years would pay HSBC £1,099 a month for this product.

As the average five-year fix is ​​5.51 per cent, this represents a monthly saving of £130.

Barclays also offers a number of competitive offerings, with its five-year fixes starting at 4.23 percent and its two-year fixes starting at 4.68 percent.

Yorkshire BS’s changes, while not as dramatic, are aimed at both buyers and home owners.

Homeowners with 25% equity in their home, remortgaging on a five-year fix with Yorkshire BS, can now get a rate of 4.69 per cent with a £495 fee, down from 4.89 per cent.

And homebuyers with a 25 per cent deposit can secure a two-year fix for 4.89 per cent with a £1,495 fee, down from 4.99 per cent.

Mortgage rates have been falling from their summer 2023 highs of 6.86 percent for a two-year fix and 6.35 percent for a five-year fix.

The cuts have accelerated in recent weeks, and the average two-year fixed mortgage rate today is 5.93 percent, while the average five-year fixed mortgage rate is 5.51 percent today.

Stephen Perkins, chief executive of Yellow Brick Mortgages, told Newspage: “Two more major banks are throwing their hats in the ring for the cheapest mortgage rates in the hope that borrowers will choose them as their lender.

“HSBC and Barclays, which announced rate cuts on Friday after Santander, Natwest and Halifax earlier in the week, are starting to add real momentum to the mortgage market.”

Ranald Mitchell, director of Charwin Mortgages, sees things a little more dramatically.

He added: “This is not just another rate cut: it is a declaration of war that will hopefully rage on for the foreseeable future.

“Both lenders are refining their strategies and are ready to lead the charge and outflank the competition.

“While battles are rarely encouraged, many homebuyers and mortgage holders will be hoping this escalates into a full-blown campaign that will deliver significant benefits.”

Why are mortgage interest rates falling?

Mortgage rates are falling due to shifting expectations around the future of interest rates. Expectations of market interest rates are reflected in swap rates.

These swaps are influenced by long-term market projections for the Bank of England’s base rate, as well as the wider economy, internal bank targets and competitor prices.

As of July 2, two-year swaps are at 4.48 percent and five-year swaps at 3.98 percent.

That’s down from a month ago, when two-year swaps were at 4.61 percent and five-year swaps at 4.05 percent.

Nicholas Mendes, mortgage technical manager at broker John Charcol, believes swaps are not the only factor driving rate cuts at the moment.

He believes the lack of activity in the mortgage market is also leading lenders to try to attract new business.

Mendes says he expects the war to continue for another two weeks before there is another lull.

He said: “Since the general election, the swaps market has seen only a slight decline, but there has been a drop in activity as potential buyers wait in the hope of new government incentives such as increased stamp duty thresholds or more options for first-time buyers. .

“Lenders have also delayed cuts to offset the potential volatility of swaps.

“As a result, lenders have held interest rates longer than preferred and are now repricing after the election.

“These factors have led to a decline in buy-to-let and remortgage activity as lenders try to make up for lost time by capturing as much market share as possible.

“Despite the fact that there has been no cut in the Bank Rate, there is a margin that allows for a cut.

“Before the break, we can expect about two weeks of repricing as lenders adjust their margins to appropriate levels. However, some major lenders may continue to compete for volume.”