Table of Contents
David Hollingworth, associate director at L&C Mortgages, said there was “every chance” more banks would follow suit.
Three big UK banks have cut mortgage rates to give borrowers a boost.
HSBC, Barclays and TSB revealed they were cutting the cost of mortgage loans, in the latest sign of relief for households also benefiting from falling inflation.
David Hollingworth, associate director at L&C Mortgages, said there was “every chance” more banks would follow suit.
The move by lenders comes just days after the Bank of England indicated it could cut interest rates as early as next month.
HSBC is reducing mortgage rates on more than 100 of its fixed deals (with terms of two, five and ten years) for both homeowners and homeowners.
Meanwhile, Barclays is cutting rates on some of its operations by up to 0.45 percentage points.
The rate on one of its five-year arrangements, for borrowers remortgaging with a 40 per cent deposit, will drop from 4.77 per cent to 4.32 per cent. TSB has cut rates on some two- and five-year deals by up to 0.1 percentage point.
Mortgage rates are set independently, but tend to anticipate the market’s view of the path of the Base Rate, which is currently 5.25 percent.
But last week the Bank of England gave the clearest signal yet that it could cut its rate this summer. Governor Andrew Bailey affirmed that the fight against inflation “is moving in the right direction” and did not rule out that a cut could be made as early as June.
> When will interest rates fall? Latest predictions from the experts.
HSBC is reducing mortgage rates on more than 100 of its fixed deals (with terms of two, five and ten years) for both homeowners and homeowners.
Mortgage rates are falling, is the situation changing for borrowers?
After falling from their peak last summer, mortgage rates have risen again this year, writes This is Money’s mortgage expert, Ed Magnus.
Average mortgage rates have risen steadily since early February, with most traditional lenders raising them several times, and mortgage brokers say yesterday’s announcements could mark a change in direction.
Since February, the cheapest five-year fixes have gone from less than 4 per cent to around 4.5 per cent and the cheapest two-year fixes have risen from around 4.2 per cent to 4.8 per cent. .
These cuts by three big banks are welcome, but follow a week of increases a fortnight ago.
But mortgage brokers have suggested this could mark a change in direction for mortgage rates, and other lenders are expected to follow suit.
For mortgage borrowers, what comes next is best implied by money market swap rates.
Mortgage lenders enter into interest rate swap agreements to protect against the interest rate risk involved in providing fixed rate mortgages.
The rates they pay to do this are known as swap rates and show what lenders believe the future holds with respect to interest rates.
This, in turn, governs the prices that lenders impose on the mortgages they provide to customers.
Swap rates have fallen since the beginning of the month. While this suggests that mortgage rates could fall, it may not be by significant margins.
