- HSBC has announced a wave of rate cuts starting tomorrow
- Barclays has cut the fixed rate for home buyers, including new best buys
- NatWest has reduced rates for those remortgaging, also with some better buys
Three major lenders have cut mortgage rates in what could be the start of a downward trend in home loan prices.
Today, Barclays has cut rates on a series of mortgage deals aimed at homebuyers, following cuts by NatWest on Friday.
HSBC also announced it will reduce rates from tomorrow on its residential and buy-to-let mortgage products.
These rapid rate cut announcements by three big banks are prompting suggestions that other lenders will follow suit and re-price downwards.
Turnaround: After months of gradual mortgage rate increases, three big banks have cut rates in quick succession
Fixed mortgage rates have been rising gently since February, but attention now turns to when the Bank of England will start cutting interest rates.
Last week, the Bank of England once again opted to keep the base rate at 5.25 percent.
However, now that inflation has returned to the central bank’s target of 2 percent and CPI inflation is projected to fall slightly below the 2 percent target next month, this could pave the way for the bank central begins to cut rates.
Markets are currently pricing in one or two interest rate cuts in 2024, the first of which will come in August or September.
If the forecasts are correct, this could mean the base rate will fall from 5.25 percent to 4.75 by the end of 2024.
Nicholas Mendes, mortgage technical manager at John Charcol, says there is now the potential for further reductions in mortgage rates.
Nicholas Mendes, mortgage technical director at broker John Charcol, said: “We can anticipate lenders will significantly step up their strategies in the coming weeks.
‘Following last week’s Monetary Policy Committee (MPC) decision and with important wage data and general election results on the horizon, markets are likely to anticipate further reductions in bank rates.
‘On Friday, the five-year rate was at 3.82 percent, indicating that lenders certainly have room to lower five-year fixed rates further from their current levels.
‘Given that lenders’ most recent price review has involved increases, there is now potential for reductions.
‘We have seen some movement, but this latest revaluation of HSBC is certainly going to stimulate the market.
“The deadlines for reviewing competitors’ prices, similar to those at the beginning of the year, will probably be from next week, taking into account upcoming announcements.”
What mortgage rates have changed?
While we’ll have to wait until tomorrow to find out the extent of HSBC’s latest price review, Barclays and NatWest are now offering some of the cheapest deals on the market.
Barclays’ lowest five-year solution aimed at those buying with a deposit of at least 40 per cent charges 4.23 per cent with a fee of £899. This is a new best buy.
The five-year average solution is currently 5.53 percent. This means that someone who needs a £200,000 mortgage and is able to get Barclays’ lowest deal over 25 years will end up paying £1,081 a month compared to the market average of £1,232.
Those buying with a 25 per cent deposit can get a rate of 4.38 per cent on a fee of £899 with Barclays.
For a buyer with a deposit of 40 per cent or more, Barclays is now also offering the lowest two-year solution – 4.68 per cent with a fee of £899.
Those buying with a 25 per cent deposit can secure a two-year fix with Barlclays at a rate of 4.75 per cent, which is also the best buy.
Simon Bridgland, mortgage broker at Release Freedom, told Newspage: ‘Barclays has launched some incredibly hot fixed rates to match the onset of the long-awaited summer sunshine.
‘More lenders will do the same this week and their rates will melt in the heat. It looks like things are going to heat up not only in our skies but also in mortgage rates.
“It is to be expected that lower fixed rates will continue to appear in the coming days.”
Meanwhile, NatWest has targeted those remortgaging. For someone with at least 40 per cent equity in their home, NatWest offers interest rates from 4.36 per cent, lower than any other lender.
Its lowest two-year fixed rate aimed at those remortgaging with at least 40 per cent of their home equity is 4.82 per cent, the joint lowest rate in the market along with Santander.
