12 July 2024 , 19:35
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This week alone Barclays, Halifax, First Direct, Nationwide and Virgin Money have all announced changes to their home deals while last week HSBC, Yorkshire Building Society, and Santander also lowered mortgage rates
The mortgage price war is heating up as more lenders slash rates ahead of a potential interest rate cut.
Barclays has today cut its rates by up to 0.33 percentage points across a wide range of deals for both homebuyers and those remortgaging. The latest reductions push the lender’s five-year purchase fixed-rate to the top of the best buy tables. The announcement by Barclays - which has cut its rates for the third time in two weeks - follows a flurry of interest rate cuts over the past couple of weeks.
Halifax also announced it is cutting mortgage rates by up to 0.13 percentage points on selected deals from today. This week alone First Direct, Nationwide and Virgin Money all announced changes to their home deals while last week HSBC, Yorkshire Building Society, and Santander also lowered mortgage rates.
According to the financial comparison website MoneyfactsCompare.co.uk, as of today, the average two-year fixed residential mortgage rate today sits at 5.92% and the average five-year fixed is 5.50%. The average two-year tracker mortgage rate is 5.94% and the average standard variable rate (SVR) mortgage is 8.17%. The number of residential mortgage products offered by lenders at the moment sits at 6,899.
Mortgage brokers have said that mortgage rates are likely to fall further, as the Bank of England is expected to cut interest rates from its current 16-year high of 5.25% at some point this year. According to the BBC, markets have currently priced in a roughly 60% chance that rates will be cut next month when the Bank of England meets on August 1.
However, Bank of England rate-setter Jonathan Haskel this week said he "would rather hold rates" at 5.25% until there is more certainty that inflation pressures had "subsided sustainably" after it fell to the 2% target last month. Stephen Perkins, managing director at broker Yellow Brick Mortgages told the news agency Newspage: "The Ferris wheel of rate reductions has returned to the top for another go around, with Barclays announcing fresh rate reductions hot on the back of their previous rate drops. This cycle is gaining momentum ahead of an expected Bank of England base rate cut in the short term. All borrowers will be enjoying the ride."
David Hollingworth, associate director at L&C Mortgages, said: “The mortgage market has been much more stable than the volatility that hit mortgage rates over the last couple of years and this is something to celebrate. Now that inflation is easing back, mortgage rates have improved and the expectation is still that the Bank will be able to start reducing interest rates this year. It’s important to note that interest rates aren’t likely to return to the ultra-lows of the last decade but there is certainly scope for further easing in base rate over time.”