- HSBC has announced a wave of interest rate cuts starting tomorrow
- Barclays has reduced fixed interest rates for home buyers, including new best prices
- NatWest has reduced interest rates for debt restructuring – even on some top offers
Three major lenders have cut mortgage rates. This could mark the beginning of a downward trend in mortgage prices.
Barclays today significantly reduced interest rates on a range of homebuyer mortgages, following NatWest’s previous rate cut on Friday.
HSBC also announced that it will cut interest rates on its residential mortgage products and buy-to-let loans from tomorrow.
The rapid announcements by three major banks to cut interest rates give rise to the assumption that other banks will follow suit and adjust their interest rates downwards.
Fixed mortgage rates have risen slightly since February, but attention now turns to when the Bank of England will start cutting rates.
Last week, the Bank of England again decided to keep its key interest rate at 5.25 percent.
However, with inflation now back at the central bank’s two percent target and consumer price index inflation expected to fall just below the two percent target next month, this could pave the way for the central bank to begin cutting interest rates.
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Markets are currently pricing in one or two rate cuts in 2024, with the first likely to occur in either August or September.
If the forecasts are correct, this could lead to a fall in the key interest rate from 5.25 percent to 4.75 percent by the end of 2024.
Nicholas Mendes, technical manager for mortgages at broker John Charcol, said: “We can expect lenders to tighten their strategies significantly in the coming weeks.”
“Following last week’s Monetary Policy Committee (MPC) decision and with key wage data and general election results looming, markets are likely to expect further cuts in bank interest rates.”
“On Friday, the five-year interest rate was 3.82 percent, suggesting that lenders have room to lower five-year fixed rates even further from their current levels.”
“Given recent interest rate adjustments by lenders, interest rates have risen, so there is now potential for price reductions.”
“We have seen some movement, but this recent price adjustment by HSBC will certainly add new momentum to the market.”
“Given the upcoming announcements, we are likely to see similar price adjustments by competitors starting next week as we did at the beginning of the year.”
Which mortgage interest rates have changed?
While we’ll have to wait until tomorrow to see the extent of HSBC’s latest price adjustment, Barclays and NatWest are currently offering some of the cheapest deals on the market.
Barclays’ lowest five-year rate for buyers with a deposit of at least 40 per cent is 4.23 per cent, with a fee of £899. This is a new best price.
The average interest rate for a five-year term is currently 5.53 per cent. This means that someone who needs a £200,000 mortgage and can secure Barclays’ cheapest deal for a 25-year term will end up paying £1,081 a month, compared to the market average of £1,232.
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Those who buy with a 25 percent deposit can secure an interest rate of 4.38 percent from Barclays with a fee of £899.
For buyers with a deposit of 40 per cent or more, Barclays also now offers its lowest two-year fixed rate – 4.68 per cent with a fee of £899.
Those who buy with a 25 percent deposit can secure a two-year fixed-rate mortgage from Barlclays at an interest rate of 4.75 percent, which is also a bargain.
Simon Bridgland, a mortgage broker at Release Freedom, told Newspage: “Barclays has launched some red-hot fixed rates to coincide with the start of the long-awaited summer sun.”
“More lenders will follow suit this week and let their interest rates melt away in the heat. It looks like it’s not just the skies that are getting hotter, but mortgage rates too.
“It is expected that there will be even more lower fixed prices in the coming days.”
NatWest has now targeted those looking to remortgage. For people who have at least 40 percent equity in their home, NatWest offers interest rates starting at 4.36 percent – lower than any other lender.
The lowest fixed interest rate over two years, aimed at people who are refinancing and have at least 40 percent equity in their home, is 4.82 percent – jointly the lowest rate on the market with Santander.
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