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Mortgage Rate Cuts by NatWest, HSBC, and Barclays

Several of the UK's major mortgage lenders and banks are showing signs of a potential ‘Summer Sale for Mortgages’ for borrowers. In this article, our MPO financial experts look at what this might mean for anyone who wants to buy a home this year.

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 26 June 2024

3 min read

Mortgage Rate Cuts by NatWest, HSBC, and Barclays

Latest news from several of the major mortgage lenders and banks in the UK are showing signs of a potential ‘Summer Sale for Mortgages’ for borrowers. Last week we heard that NatWest was the first to introduce wholesale rate cuts across its entire range of mortgage products, on average rates dropped by 0.15%.

We’ve now heard that this week, several other major banks and mortgage lenders have followed suit with similar rate reductions. This week, Barclays and HSBC are the latest of the big banks to join in the trend of ‘Rate Cuts’ for mortgage borrowers.

This is the first time since mortgage rates started to increase in 2021 that we’ve seen this type of behaviour across the entire mortgage market. We believe that mortgage interest rates and the Bank of England base rate (BBR) will continue to fall over the summer by small amounts.

Last weeks meeting of the Monetary Policy Committee saw the most controversial decision in recent times to hold the base rate at 5.25%, despite inflation dropping the government’s target of 3% in May.

What is happening to mortgage interest rates?

The latest updates from several of the major mortgage lenders, including NatWest, Barclays, HSBC, and Furness Building Society, is showing an average of 0.15% rate cuts across residential and Buy-to-Let mortgage deals.

Mortgage borrowers have been feeling a serious pinch in their repayments and monthly outgoings since the rates started to rocket in 2021. Many borrowers have been hit with £100’s or even £1,000’s in extra mortgage costs over the past few years, on top of the cost of living crisis.

The Bank of England is under massive pressure to reduce the mortgage interest rate in July to at least 5% from the current 5.25%. This is likely to knock on to lender mortgage deals which are already showing signs of positivity.

What is the average 2 year Fixed Rate Mortgage?

The most popular mortgage deal at the moment for mortgage borrowers in the UK is a short-term fixed rate, so 2 years or 3 years. We can see that 2 year fixed rate mortgage deals are still slightly higher than 5 year fixed rates, which are being offered to incentivise borrowers to fix for longer.

In June 2024 the average 2 year fixed rate mortgage for a standard 85% loan to value mortgage is now falling below 5% to around 4.95% with a lender fee, or around 5.2% with no fee.

What is the average 5 year Fixed Rate Mortgage?

Mortgage lenders are still showing a preference towards offering lower 5 year fixed rate mortgage deals to shorter term 2 and 3 year fixed rates. This still shows that the main mortgage lenders are expecting the interest rates to drop over the next 2 to 3 years, but we still can’t really say by how much.

Recent announcements have seen 5 year fixed rate mortgage deals dropping to as low as 4.6% from 4.8% with a lender fee, and down to 4.75% with no fee. Mortgage borrowers are now faced with a dilemma of whether to fix for a longer period of time for security or hedge their bets with a shorter deal.

How to find the best mortgage deal for your family

There are still a mind blowing number of mortgage deals that are available, with around 6,000 different rates to choose from. Mortgage borrowers are also still being subjected to greater checks and scrutiny when they apply for a new mortgage, as lenders criteria continues to be a problem for many.

It is definitely a time where you should be getting proper advice from a qualified mortgage expert to find the right deals. While we understand the need to save money, you can end up paying more simply by trying to avoid upfront adviser charges.

If you need to speak to a qualified mortgage expert then you can call 0800 009 6559 or CLICK HERE for more information and help.

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