HSBC, Barclays and NatWest are among the major high street lenders reducing mortgage rates as experts are claiming “things are looking a lot more optimistic” the Bank of England will cut the base rate.
Interest rates have remained relatively high due to the central bank’s decision to raise the UK’s base rate in its fight to ease the consumer price index (CPI) rate of inflation.
Earlier this week, Barclays reduced the cost of its fixed-rate home loans for new deals on Tuesday, shortly after NatWest carried out a similar rate cut across its line of mortgage products.
From today, HSBC has also cut interest rates on its mortgage offerings with many brokers anticipating more reductions in the weeks ahead.
Despite this, homeowners and prospective homebuyers across the UK are still saddled with soaring costs.
As it stands, the average two-year fixed rate mortgage has an interest rate of 5.96 per cent, according to Moneyfactscompare.
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In comparison, the average five-year deal had a rate of 5.53 per cent, with the standard variable sitting at a staggering 8.18 per cent.
As of today, HSBC has launched a range of reduced offers for residential and landlord rates across two, three and five-year terms for both new and existing customers.
The high street bank will introduce a range of offers across two, three and five-year terms, at a range of ratio values for new and existing customers.
A HSBC spokesperson says: “We are firmly focused on helping customers onto or up the property ladder.
“There are a number of factors that are 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 ranges, from tomorrow.”
On Monday (June 24), Barclays confirmed rate cuts of up to 31 basis points for home buyers, while NatWest has announced it will slash rates by 71 basis points.
This comes shortly after the Bank of England confirmed it would hold the base rate at a 16-year high of 5.25 per cent which proved to be controversial among many analysts.
Prior to this, the CPI inflation for the 12 months fell to the Bank’s desired target of two per cent but the central bank continues to be cautious about implementing any changes.
Experts are betting on interest rates being cut in the later half of the year but some are pricing in the Bank of England taking action at its next meeting.
Speaking to Newspage, Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said: “Summer is here and the sun is finally shining over borrowers, who have been in the swap rate shade 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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John Charcol, a mortgage technical manager Nicholas Mendes points out: “Following last week’s Monetary Policy Committee 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 money rate was at 3.82 per cent, indicating that lenders certainly have room to lower five-year fixed rates even further from their current levels.
“Interestingly, last week saw Sonia swaps holding steady at 5.2 per cent since May 7 — the longest stable period since the benchmark’s inception in 1997.”
The Bank of England’s Monetary Policy Committee (MPC) will next make an announcement regarding the base rate on August 1, 2024.