Photo by Mortgage Lenders Cut Rates Amid Heated Competition
Britain’s biggest banks are slashing mortgage rates to attract borrowers as competition heats up over the summer. Halifax, HSBC UK, Barclays, Santander, and NatWest are among those to shake up their ranges this week. This could bring some relief to borrowers scouring for a better deal, although many people looking to re-mortgage will still find rates are significantly higher than those they have previously been paying.
Image: Mortgage rates are being cut by major lenders
According to UK Finance, some 1.6 million mortgages are coming off fixed rates this year. This has led to a surge in competition among lenders, with many reducing their rates to stay ahead of the game. Barclays has announced it is reducing rates on a selection of products from Friday, including in its residential and buy-to-let ranges.
HSBC UK also plans to snip some rates in its mortgage product ranges from Friday. This marks the bank’s second rate cut in two weeks. An HSBC UK spokesperson said: “There are a number of factors that are taken into account when setting mortgage rates, and following a review, we are reducing several hundred rates across all of our residential ranges including first-time buyers, home movers, and people looking to re-mortgage from tomorrow.”
Santander reduced selected fixed rates for home buyers on Thursday, by up to 0.16 percentage points. Yorkshire Building Society also said on Thursday it has reduced its mortgage interest rates by up to 0.20 percentage points “with immediate effect”.
Ben Merritt, the Yorkshire’s director of mortgages, said market conditions have allowed it to reduce rates on several products across its range. He added: “We will continue monitoring developments closely over the coming weeks, in order to ensure our mortgages remain as competitive as possible.”
Lending giant Halifax cut rates on Wednesday on a range of home buyer fixed-rate mortgages by up to 0.19 percentage points. This followed cuts to its re-mortgage product rates last week.
Halifax’s refreshed range includes a five-year fixed-rate mortgage at 4.26%, reduced from 4.45%, for people with a 40% deposit. The deal has a £999 fee.
On Tuesday, NatWest made a range of rate reductions to both its “new business” and existing customer mortgage ranges.
According to financial information website Moneyfacts, the average two-year fixed-rate homeowner mortgage rate on the market is 5.93%. This is down from an average rate of 5.94% on Wednesday.
Those lenders who haven’t yet repriced are likely to follow suit, according to Mark Harris, chief executive of mortgage broker SPF Private Clients.
“With the big five lenders - Barclays, HSBC, Santander, Halifax, and NatWest - reducing their mortgage rates this week, lenders continue to jostle for business as they ramp up the summer sales,” he said.
“Even though swap rates, which underpin the pricing of fixed-rate mortgages, are not showing a consistent downwards trend, the need to generate more business seems to be motivating lenders to tweak their rates.”
Image: Mortgage brokers are seeing increased competition among lenders
The Bank of England base rate has been held at 5.25%, but with Consumer Prices Index (CPI) inflation recently hitting its 2% target, there are expectations of a base rate cut on the horizon.
There have also been some signs of the housing market picking up. HM Revenue and Customs (HMRC) figures recently showed the number of UK house sales increased for the fifth month in a row in May.
Mortgage Rates: What’s Next?
As the summer months approach, it’s likely that lenders will continue to compete for borrowers. With many expecting a base rate cut in the near future, it’s possible that mortgage rates could fall even further.
However, borrowers should be cautious and not assume that rates will continue to fall. It’s essential to shop around and compare rates to find the best deal for your individual circumstances.
Image: Borrowers should shop around for the best mortgage rates
In the meantime, lenders will continue to monitor market conditions and adjust their rates accordingly. As the mortgage market continues to evolve, one thing is certain - borrowers will be the ultimate winners in this game of rate-cutting.
About the Author
This article was written by a journalist at MortgageWatch, your go-to source for the latest mortgage news in the UK. Stay informed with our timely updates and expert analysis.
