Home Money Mortgage rate cuts continue: HSBC and TSB latest to cut home borrowing costs

Mortgage rate cuts continue: HSBC and TSB latest to cut home borrowing costs

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Three in one day: Three major lenders announced interest rate cuts starting tomorrow
  • The lowest five-year fixed mortgage rate has fallen from 4.28% to 3.83% since July 1

The mortgage rate war continues to rage, with Barclays, HSBC and TSB among the latest lenders to slash home loan prices.

This comes after weeks of rate cuts that saw the lowest five-year fixed mortgage rate fall from 4.28 percent to 3.83 percent since the start of July.

Meanwhile, the lowest two-year fixed rate fell from 4.68 percent to 4.22 percent during that period.

Three in one day: Three major lenders announced interest rate cuts starting tomorrow

However, although there are now eight lenders offering five-year fixed rates below 4 percent, mortgage offers are still much higher than many borrowers are used to.

According to UK Finance, around 700,000 fixed-rate contracts are expected to expire in the second half of this year. Many of these will be at interest rates of around 2% or less.

And although the lowest rates have fallen below 4 percent, the average market fixed rate remains above 5 percent.

In fact, the average five-year fixed mortgage rate is currently 5.27 per cent and the average two-year fixed rate is 5.64 per cent, according to rates watchdog Moneyfacts.

What will change tomorrow?

Starting tomorrow, HSBC will be making a series of rate cuts across its fixed-rate products aimed at home-movers, first-time buyers, homeowners and people refinancing their mortgages.

Although rates won’t be made public until tomorrow, borrowers can expect to see improvements across a broad spectrum of deals, including two-, three- and five-year fixed deals.

Rate cuts will not only benefit those with the largest deposits, but also look set to benefit those buying with 5 or 10 per cent deposits.

Nicholas Mendes, mortgage technical manager at broker John Charcol, believes HSBC’s cuts may include better buying from tomorrow.

“HSBC’s recent decision on repricing is not a surprise as it follows similar actions by other major lenders in the sector,” Mendes said.

‘Given the competitive nature of the mortgage market, it was only a matter of time before HSBC adjusted its rates in response to broader market trends.

‘This move is strategically aligned with the bank’s efforts to remain competitive and potentially position itself as a new best buy.’

TSB has also announced cuts of up to 0.25 percentage points on its two-, three- and five-year fixed-rate deals aimed at homeowners, home movers and first-time buyers, with new rates starting tomorrow.

Justin Moy, managing director of EHF Mortgages, told Newspage: ‘TSB is doing a great job at the moment.

‘Further cuts in mortgage rates will be welcome news for borrowers as the market looks to encourage more activity for home buyers and first-time buyers, improving affordability and keeping the housing market turning.

‘Those looking to refinance will have to be patient as rates will eventually recover, but with housing transaction numbers subdued, lenders are clearly keen to go further where possible.’

Barclays will also cut rates on some domestic product transfer transactions from tomorrow despite already offering some of the best deals on the market.

Currently, its lowest five-year fixed rate is 3.84 per cent, with a fee of £899. On a £200,000 mortgage to be repaid over 25 years, that would mean paying £1,038 a month.

That said, Barclays is also withdrawing three of its products aimed at home-movers, including its 4.14 per cent five-year fixed rate for those buying with a 25 per cent deposit and its 4.37 per cent five-year fixed rate for those buying with a 15 per cent deposit.

How to find a new mortgage

Borrowers who need a mortgage because their current fixed-rate contract is ending or are purchasing a home should explore their options as soon as possible.

What if I need to refinance my mortgage?

Borrowers should compare rates, talk to a mortgage broker and be prepared to act.

Landlords can close a new deal six to nine months in advance, often with no obligation to accept it.

Most mortgage agreements allow fees to be added to the loan and only charged at the time of contracting. This means borrowers can lock in a rate without paying costly origination fees.

Please note that by doing this and not paying off the fee at the end, interest will be paid on the fee amount for the entire term of the loan, so this may not be the best option for everyone.

What if I’m buying a house?

Those with home purchases lined up should also try to get rates as soon as possible, so they know exactly what their monthly payments will be.

Buyers should avoid over-stretching themselves and be aware that home prices can fall as higher mortgage rates limit people’s borrowing capacity and purchasing power.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to speak to a broker.

This is Money has a long-standing partnership with free broker L&C, to provide you with expert, free mortgage advice.

Are you interested in seeing today’s best mortgage rates? Use This is the best mortgage rate calculator from Money and L&C to display offers that match your home value, mortgage size, term, and fixed rate needs.

If you’re ready to find your next mortgage, why not use L&C’s Online Mortgage Finder? This will search through thousands of offers from over 90 different lenders to discover the best option for you.

> Find your best mortgage offer with This is Money and L&C

Please note that rates can change quickly, so if you need a mortgage or want to compare rates, speak to L&C as soon as possible so they can help you find the right mortgage for you.

The mortgage service is provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registration number: 143002). The FCA does not regulate most buy-to-let mortgages. Your home or property may be repossessed if you fail to keep up your mortgage payments.

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