Mortgage Rates Slashed as Banks Compete for Borrowers
Britain’s biggest banks are cutting mortgage rates as competition to attract borrowers heats up over the summer. HSBC UK and Barclays are among those to shake up their ranges this week, which could bring some relief to borrowers searching for a better deal.
Competition heats up in the mortgage market
However, in the higher interest rate environment, many people looking to re-mortgage will still find rates are significantly higher than those they have previously been paying. According to UK Finance, some 1.6 million mortgages are coming off fixed rates this year.
Barclays has announced it is reducing rates on a selection of products, including in its residential and buy-to-let ranges. HSBC UK also plans to snip some rates in its mortgage product ranges. Those who may see HSBC’s rates fall include existing customers looking to switch or borrow more, as well as first-time buyers and home movers.
Mortgage applications on the rise
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”. Its deals include a five-year fixed rate at 4.84 per cent, which was previously 4.99 per cent, for re-mortgage purposes, at up to 80 per cent loan-to-value (LTV) with a £1,495 fee, free valuation and free re-mortgage legal work.
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 per cent, reduced from 4.45 per cent, for people with a 40 per cent deposit. The deal has a £999 fee.
Mortgage rates continue to fall
According to financial information website Moneyfacts, the average two-year fixed-rate homeowner mortgage rate on the market is 5.93 per cent. This is down from an average rate of 5.94 per cent on Wednesday. The average five-year fixed residential mortgage rate is 5.51 per cent. This is unchanged from the previous working day.
Moneyfacts counted 6,739 homeowner mortgage products on the market – a number which has increased from 6,736 products on Wednesday.
The Bank of England, which is led by governor Andrew Bailey, has held base rate at 5.25 per cent, but with Consumer Prices Index (CPI) inflation recently hitting its 2 per cent target, there are expectations of a base rate cut on the horizon.
Interest rates on the horizon
