The UK’s largest banks are slashing their mortgage rates as competition to attract borrowers intensifies this summer. Halifax, HSBC UK, Barclays, Santander and NatWest are lowering their rates this week in a move which will help homeowners across the country.
Lower rates could provide some relief for those seeking a better deal, although many looking to re-mortgage may still find rates significantly higher than what they were previously paying due to the current high-interest rate environment.
According to UK Finance, approximately 1.6 million mortgages are set to come off fixed rates this year. Barclays has announced reductions in rates on a selection of products from Friday, including its residential and buy-to-let ranges.
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HSBC UK also plans to cut some rates in its mortgage product ranges from Friday, with further details to be provided on the day. The bank’s rate reductions will potentially benefit existing customers looking to switch or borrow more, as well as first-time buyers and home movers.
On Thursday, Santander reduced selected fixed rates for home buyers by up to 0.16 percentage points. Yorkshire Building Society also announced on Thursday that 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 percent, down from 4.99 percent, for remortgage purposes, at up to 80 percent loan-to-value (LTV) with a £1,495 fee, free valuation and free remortgage legal work.
Ben Merritt, the director of mortgages at Yorkshire, has stated that current market conditions have allowed for a reduction in rates on several products across their range. He further added: “We will continue monitoring developments closely over the coming weeks, in order to ensure our mortgages remain as competitive as possible.”
In related news, Halifax, the lending giant, reduced rates on Wednesday on a variety of home buyer fixed-rate mortgages by up to 0.19 percentage points. This follows last week’s cuts to its re-mortgage product rates.
Halifax’s updated range now includes a five-year fixed-rate mortgage at 4.26 percent, down from 4.45 percent, for individuals with a 40% deposit. The deal comes with a £999 fee.
On Tuesday, NatWest also made a series of rate reductions to both its “new business” and existing customer mortgage ranges. According to Moneyfacts, a financial information website, the average two-year fixed-rate homeowner mortgage rate on the market is currently 5.93 percent. This is a slight decrease from Wednesday’s average rate of 5.94 percent.
The average five-year fixed residential mortgage rate remains unchanged from the previous working day at 5.51%. Moneyfacts recorded 6,739 homeowner mortgage products on the market a slight increase from Wednesday’s count of 6,736 products.
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The Bank of England base rate remains at 5.25 percent, but with the Consumer Prices Index (CPI) inflation recently hitting its 2 percent target, there are expectations of a potential base rate cut in the near future.
There are indications that the housing market is gaining momentum. Recent figures from HM Revenue and Customs (HMRC) reveal that UK house sales have risen for the fifth consecutive month in May.
Mark Harris, CEO of mortgage broker SPF Private Clients, commented: “With the big five lenders Barclays, HSBC, Santander, Halifax and NatWest reducing their mortgage rates this week, lenders continue to jostle for business as they ramp up the summer sales.”
He added: “Those lenders who haven’t yet repriced are likely to follow suit, as long as service levels allow. Even though swap rates, which underpin the pricing of fixed-rate mortgages, are not showing a consistent downwards trend, the need to generate more business seems to be motivating lenders to tweak their rates.”
Harris concluded: “It’s good news for borrowers, many of whom are struggling with affordability after successive rate rises and then holds. Expectations of a rate reduction in August are high.”
