Major High Street Lenders Slash Mortgage Rates, Offering Relief to Borrowers
In a welcome development for borrowers, Barclays, HSBC, and TSB have announced significant reductions in mortgage rates on more than 100 deals. These rate cuts come at a time when many borrowers have been facing rising rates in the market.
Barclays is set to implement substantial cuts on Friday, with fixed rates on both purchase and remortgage deals being reduced by up to 0.45 percentage points. For example, the rate on one of its five-year fixed deals will drop from 4.77% to 4.32% for borrowers remortgaging with a 40% deposit.
HSBC has also announced plans to lower interest rates on over 100 of its fixed deals, spanning two, five, and ten years, targeting both homeowners and landlords. TSB has followed suit by cutting rates on some of its two and five-year deals by up to 0.1 percentage points.
Industry experts believe that these rate cuts by major lenders will likely prompt other institutions to follow suit. The current market conditions and competition among lenders could lead to further reductions in mortgage rates.
These reductions come after a period of increasing mortgage rates, driven by delayed expectations of an interest rate cut by the Bank of England. However, recent developments, including a fall in swap rates and the Bank of England’s indication of a possible rate cut in the near future, have led to a change in trend.
Mark Harris of SPF Private Clients stated, “This flurry of rate reductions from major lenders is great news for borrowers. Lenders tend to follow each other when it comes to mortgage pricing, so these cuts should boost market activity and confidence.”
According to analyst Moneyfacts, the average two-year fixed rate currently stands at 5.92% and the average five-year deal at 5.49%. However, these averages include deals for borrowers with adverse credit ratings and small deposits, which typically have higher rates.
With approximately 800,000 households expected to transition to a higher rate between now and November, the recent rate cuts by major lenders offer a timely opportunity for borrowers to secure lower rates and potentially save money over the term of their mortgage.
Nicholas Mendes of John Charcol highlighted the “significant potential” for further rate reductions in the next two weeks, as financial markets adjust their forecasts. This series of rate cuts by major lenders is expected to provide much-needed relief for homeowners and stimulate market activity and confidence in the coming weeks.