Despite the Bank of England's recent base rate hike, mortgage lenders have been reducing their borrowing costs. This comes as a surprise to many who expected interest rates to rise across the board.
In a move that could save borrowers thousands of pounds over the life of their loans, several mortgage lenders are reducing their fixed and variable rates. This comes as they strive to stay competitive in a crowded marketplace.
Despite the Bank of England's recent increase in the Bank Rate from 4% to 4.25%, many lenders are cutting rates across their mortgage ranges. Here are some of the notable cuts:
Nationwide Building Society
Nationwide has reduced rates on its fixed and tracker mortgages by as much as 0.45%. Its five-year fixed rate mortgage now starts at 3.94% (60% LTV).
NatWest has cut its buy-to-let fixed rates by up to 0.27%, with a five-year fix (75% LTV) now starting at 4.62%.
HSBC has also cut its fixed rates, with the 80% LTV product now starting at 4.24%.
Clydesdale Bank, which is part of Virgin Money, has lowered the fixed rates on several of its mortgage deals by up to 0.6%. A two-year fixed rate for remortgage customers now starts at 4.74% (80% LTV).
Coventry BS has reduced its buy-to-let fixed rates by up to 1% and its residential rates by up to 0.2%. Its five-year fixed rate mortgage now starts at 4.6%.
What's Driving These Cuts?
Steve Cox, the chief commercial officer at Fleet Mortgages, says that several factors are behind the rate cuts. "Due to a combination of factors, including a softening of swap rates and further movement within the sector, we've been able to reduce our fixed-rate pricing across the board by 0.2 percentage points," he said.
Cox also points to the UK's recent budget announcement, saying that it has helped ease market sentiment. "The Budget last week, and in particular the Office for Budget Responsibility's inflation and interest rate forecasts, appear to have added a further layer of calm to market sentiment, with the belief that rates will now peak at a lower level than previously feared. It means we've been able to review our pricing and cut it accordingly," he explained.
What This Means for Borrowers
If you're in the market for a mortgage, these cuts could translate into significant savings over the life of your loan. Be sure to shop around and compare rates from multiple lenders to find the best deal. With so much competition in the market, you may be able to secure a lower rate than you initially thought possible.
While the recent base rate hike by the Bank of England may have led to concerns about rising interest rates, mortgage lenders have actually been reducing borrowing costs. This presents an opportunity for those in the market for a mortgage, but it's important to carefully consider all options and seek professional advice before making any decisions.
This is good news for those looking to get a mortgage or refinance their current mortgage. However, it's important to remember that the interest rate you'll be offered will depend on your credit score and other factors.