All the high street banks cutting mortgage rates - from HSBC to Barclays
Major high street lenders have started cutting mortgage rates this week - sparking hope for struggling homeowners.
It comes after inflation fell by more than expected - dipping to 7.9% in the 12 months to June after spending two months previously stuck at 8.7%.
This has led to hopes that the Bank of England may not have to raise interest rates to levels as high as previously feared.
The BoE will next make an interest rates decision on August 3 and is now widely expected to raise the base rate to 5.25% instead of 5.5%.
The base rate - which influences how much banks and lenders charge you to borrow money - is now at 5%.
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It has been hiked thirteen times since December 2021, when it stood at a record low of 0.1%.
City analysts now predict interest rates will peak at either 5.5% or 5.75% instead of above 6% - although this is still well above the BoE target of 2% inflation.
If you have a mortgage, a future base rate rise could push up your monthly repayments, depending on the type of deal you have.
Tracker mortgages “track” the base rate, so this type of deal goes up when the base rate increases.
Variable rate deals are normally affected as well, although it is down to your lender to decide if they put up your rate.
If you have a fixed rate mortgage, your monthly repayments won’t change until your deal ends.
Mortgage rates are currently at a 15-year high - and the Bank of England this month said rising interest rates could cost one million borrowers an extra £500 a month by 2026.
The average two-year fixed residential mortgage rate today is 6.81%, while the average five-year fix is 6.34%, according to new data from Moneyfacts.
But in some good news, major high street lenders have started to cut their rates, including:
- HSBC: Rates reduced by up to 0.35 percentage points
- Nationwide: Rates reduced by up to 0.35 percentage points
- Barclays: Rates reduced by up to 0.15 percentage points
- TSB: Rates reduced by up to 0.55 percentage points
Coventry Building Society, Yorkshire Building Society, Nottingham Building Society and Skipton Building Society have also cut rates this week.
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Rachel Springall, finance expert at Moneyfacts, said: “Its positive to see some lenders making cuts to their fixed rate mortgages this week.
"The mortgage market remains volatile, and it may take a few weeks for more significant improvements to surface, especially as another base rate decision looms.
"Those borrowers who are still tied into a low fixed rate mortgage would be wise to overpay where they can, but for those coming off a deal its vital they speak to their lender and seek independent advice if they are struggling to make repayments."
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