Major Lenders Slash Mortgage Rates, Offering Relief to Borrowers and Boosting Market Confidence

Major Lenders Slash Mortgage Rates, Offering Relief to Borrowers and Boosting Market Confidence

Major Lenders Cut Rates on Over 100 Deals

Good news for borrowers! Three major high street lenders, Barclays, HSBC, and TSB, have announced significant reductions in mortgage rates on over 100 deals. This welcome relief comes after weeks of rising rates that have put a strain on borrowers.

Barclays will implement significant cuts on Friday, reducing fixed rates on purchase and remortgage deals by up to 0.45 percentage points. Notably, the rate on one of its five-year fixed deals will drop from 4.77% to 4.32% for borrowers remortgaging with a 40% deposit.

HSBC has also announced plans to lower interest rates on over 100 of its fixed deals spanning two, five, and ten years, targeting both homeowners and landlords. TSB is joining the trend with reductions on some of its two and five-year deals, cutting rates by up to 0.1 percentage points.

Brokers anticipate that these rate cuts will prompt other lenders to follow suit. Hina Bhudia of Knight Frank Finance commented, "HSBC already had many of the cheapest deals on the high street, so this is quite a statement of intent. We'll have to wait and see, but I'd be surprised if we don't see more lenders cut rates in response."

These reductions come after a period of increasing mortgage rates, driven by delayed expectations of an interest rate cut by the Bank of England due to persistent inflation and rising swap rates. However, last week, the Bank of England maintained borrowing costs at a 16-year high of 5.25% but indicated that a rate cut could occur as soon as next month if inflation continues to decrease. This, combined with a recent fall in swap rates, has buoyed lenders.

Mark Harris of the mortgage broker SPF Private Clients said, "This flurry of rate reductions from some of the major lenders is great news for borrowers. Lenders tend to follow the herd when it comes to mortgage pricing, so these cuts should give others the confidence to reduce their own rates, boosting market activity and confidence."

Currently, the average two-year fixed rate is 5.92% and the average five-year deal stands at 5.49%. Experts believe there is significant potential for further rate reductions in the next two weeks. Nicholas Mendes of the broker John Charcol advises borrowers who have recently applied for a mortgage to consider switching to a lower rate given the change in market conditions.

This series of rate cuts by major lenders provides a much-needed respite for homeowners and is expected to stimulate market activity and confidence in the coming weeks.