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6 biggest lenders make significant cuts

Navigating the waves: Unravelling the latest mortgage interest rate cuts by major lenders”

Mortgages and surfing have a lot in common. It’s about catching that wave at the right time for a smooth ride!

In the ever-changing landscape of the housing market, prospective homebuyers and current homeowners are closely monitoring the shifts in mortgage interest rates. Recently, some of the 6 biggest lenders in the industry have made headlines with significant interest rate cuts, sparking both excitement and curiosity among consumers. This news is particularly welcomed by homeowners across the country, 1.6 million of whom will see their existing fixed mortgage end next year.

The mortgage market

What rates are banks offering?

The cheapest two-year fixed re-mortgage rates have dipped below 5 per cent for the first time since July. Lenders including Yorkshire Building Society, Virgin Money, the Bank of Ireland all offering sub 5 per cent rates. With the best re-mortgage deal currently available at 4.49 percent.

  • First Direct announced cuts of 0.4 percentage points. With a new mortgage deal for borrowers with 5 per cent deposit.
  • Halifax will cut by 0.46 percentage points. With five year fixed at 4.97 per cent (10% deposit ) and 4.53 percent  (40 % deposit). £999 fee
  • Barclays will also join the sub-5 per cent club. It will offer a two-year fixed re-mortgage at 4.98 per cent with a £999 fee, for those with at least 40 per cent equity.
  • HSBC is expected to announce cuts this week

 

Stick or twist?

Is fixing into a 5 year mortgage a gamble?

Inflation fell to 4.6 per cent in October, a big drop on the 6.7 per cent recorded in September.

With inflation forecasted to continue falling over the coming months, this will remove the core reason for the base rate rising in the first place.

Analysts at Morgan Stanley have already forecast that interest rates will be cut as soon as May next year and fall to 4.25 per cent by the end of 2024.

Mortgage lenders change their fixed mortgage rates on the back of expected funding costs, which are ultimately tied into the market’s predictions about how high the base rate will ultimately go, and this is in turn closely linked to the outlook for inflation.

Swap rates have fallen in response to the inflation data, with five-year swaps falling from 4.27 per cent to 4.12 and two-year swaps falling from 4.78 per cent to 4.66 per cent since Monday.

With swap rates reducing lenders will be fighting to onboard homeowners, analysts predict there is a real chance that we could see a sub 4 per cent five-year fix this side of Christmas, and a two-year below 4.5 per cent also.