Lenders cut mortgage rates to below 4% following interest rate cut
A number of mortgage lenders have reduced prices on fixed-rate deals following the cut to interest rates last week.
Barclays and HSBC are the latest to announce they have lowered rates and their newly priced ranges both include deals which are below 4%.
Nationwide became the first lender to offer a fixed-rate mortgage deal for home movers at below 4% when it introduced a five-year offering at 3.99% in July.
The Bank of England then announced, last week, it was cutting interest rates from 5.25% by 0.25% to 5%.
Following this several borrowers including Skipton Building Society, Leeds Building Society and Virgin Money announced reductions to fixed rate mortgages.
NatWest then followed with an offering which included a five-year fixed rate, also for movers, at 3.97%.
Today it has emerged HSBC will be offering a five-year fix at 3.95% and Barclays has swooped into the ‘sub-4%’ market with a five-year fixed rate of 3.84%.
All the sub-4% deals are for those who are purchasing a home and need to borrow at lower loan-to-value (LTV) tiers. This means successful applicants would need large amounts of equity – at least 40%. However, experts predict more price cuts of this nature could follow.
Emma Jones, managing director at Whenthebanksaysno.co.uk, speaking via the Newspage Agency, said: “This is the news borrowers have been waiting for. More lenders going 4% is symbolic and generates real confidence among borrowers.
“This is another step in the right direction for rates and suggests we are going to see a lot more activity during the rest of 2024. Let’s hope rates get more competitive at higher LTVs.”
Nicholas Mendes, mortgage technical manager at John Charcol, said he anticipated similar moves next from Santander and Halifax.
But he reminded borrowers of the importance of looking beyond the headline rates.
“It’s essential to consider more than just the interest rates,” he said. “Some attractive low-rate mortgages come with substantial fees, so understanding the total cost of switching is crucial. Begin your research at least six months before your current mortgage deal ends to give yourself ample time to explore the market.
“While it may be tempting to delay in the hope that mortgage rates will continue to fall, it’s important to stress that nothing is guaranteed. If anything unsettles the market, we could see a delay or pause in the current downward trend.
“For this reason, securing a rate early is advisable. Continue to review the market, and if rates fall further, you can switch to a new deal with the same lender or opt for a different one. If rates increase, at least you have secured favourable terms.”
