HSBC, Barclays and NatWest are among the big major lenders cutting mortgage rates as experts say ‘things are looking much more optimistic’. The Bank of England will cut the base interest rate.
Interest rates have remained relatively high following the central bank’s decision to raise the UK base rate as it battles to bring down consumer price index (CPI) inflation.
Earlier this week, Barclays on Tuesday cut the cost of its fixed-rate home loans for new deals, shortly after NatWest made a similar rate cut to its mortgage products.
From today, HSBC has also reduced interest rates on its mortgage offering. Many brokers expect further cuts in the coming weeks.
Despite this, homeowners and potential home buyers in the UK are still saddled with rising 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 deal had an interest rate of 5.53 percent, while the standard variable stood at a whopping 8.18 percent.
From today, HSBC has launched a range of reduced home and landlord rate offers over two, three and five year terms for both new and existing customers.
The high street bank will introduce a range of offers over two, three and five year terms, at a range of ratios for new and existing customers.
An HSBC spokesperson said: “We are strongly focused on helping customers climb the housing ladder.
“There are a number of factors taken into account when setting mortgage rates, and following a review we are reducing over 300 mortgage rates across our residential and buy-to-let mortgage range from tomorrow.”
On Monday (June 24), Barclays confirmed rate cuts of up to 31 basis points for homebuyers, while NatWest announced it will cut rates by 71 basis points.
This comes shortly after the Bank of England confirmed it would keep the base rate at a 16-year high of 5.25 percent, which proved controversial among many analysts.
Previously, CPI inflation for the past 12 months had already fallen to the central bank’s desired target of two percent. However, the central bank remains cautious about making changes.
Experts are betting that interest rates will be cut in the second half of the year, but some expect the Bank of England to take action at its next meeting.
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, told Newspage: “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 a lot more optimistic and If that first rate cut comes in August, all bets are off.”
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The Bank of EnglandFATHERJohn Charcol, Technical Manager for Mortgages, Nicholas Mendes, comments: “Following last week’s Monetary Policy Committee decision and with key wage data and general election results on the horizon, markets are likely to expect further cuts in the bank rate.
“On Friday, the five-year cash rate stood at 3.82 percent, indicating that lenders certainly have room to reduce the five-year fixed rate even further from their current levels.
“Interestingly, Sonia swaps remained stable last week at 5.2 percent since May 7 – the longest stable period since the benchmark was introduced in 1997.”
The Bank of England’s Monetary Policy Committee (MPC) will then make an announcement on the base rate on 1 August 2024.