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- NatWest to offer some of the best fixed rates on the market from tomorrow
A major major bank has announced it will reduce mortgage rates by up to 0.39 percentage points.
NatWest has said there will be widespread rate cuts on its two- and five-year fixed products, with home buyers, home remortgaging and buy-to-let landlords benefiting.
Almost all of NatWest’s changes will be within the 4 to 5 per cent range and its lowest fixing in five years will start from a market-leading 4.1 per cent from tomorrow.
Mortgage rates have been rising since early October, and the lowest rates have increased about 0.5 percentage points since then.
Currently, the lowest five-year rate offered by major lenders is a rate of 4.14 per cent with Nationwide Building Society. Meanwhile, the lowest rate in two years is 4.22 percent.
The announcement comes after the Bank of England governor said four interest rate cuts are likely next year as inflation eases.
Turning point: Starting tomorrow, NatWest will slash the cost of its fixed-rate home loan deals
Where will mortgage rates go next?
Talking to him Global boardroom conference with the Financial TimesAndrew Bailey confirmed the Bank of England’s central forecast of four quarter-point cuts in interest rates next year, which would result in interest rates falling to 3.75 per cent by the end of 2025, from his current level of 4.75 percent.
This represented a slight change from the general market consensus, which had seen interest rates fall to 4 percent by the end of next year.
Future interest rate cuts by the Bank of England are already to some extent built into fixed rate mortgage prices.
This is why the lowest priced five-year fixed rate products hover just above 4 per cent, rather than above the Bank of England’s base rate of 4.75 per cent.
However, NatWest’s decision to cut rates could represent a turning point, according to some brokers.
Ben Perks, managing director of Orchard Financial Advisers, told news agency Newspage: ‘This week has been largely positive. For the first time since the Budget, we have seen more reductions than increases.
“It definitely seems like the winds are changing and I hope they continue to do so.” Let’s hope that a period of calm in interest rates over the next few weeks will propel us into a new year full of positivity.’
Daniel Hobbs, managing director of financial adviser New Leaf Distribution, added: ‘A major lender like NatWest cutting rates will surely send signals to other lenders.
“For several months before the budget, rates were falling and, after a month-long hiatus, sentiment in the mortgage market appears to be improving.”
Justin Moy, managing director of EHF Mortgages, said there has been a small improvement in swap rates, which fixed rate mortgages are discounted.
Five-year swaps were at 3.78 percent as of Dec. 3, having been above 4 percent late last month.
Moy also credits increased market competition with driving down rates and allowing NatWest to give borrowers “some end-of-year cheer”.
“This may be the start of a January campaign by lenders to grab some market share,” Moy said.
“With millions of borrowers looking for a new deal in the coming months, this is an important time for lenders to attract new business and hit their targets early.”