‘Light at the end of the tunnel’ as major lender slashes rates ahead of Bank of England interest rate decision

A MAJOR lender has slashed its mortgage rates after inflation slowed more than expected and ahead of a key Bank of England meeting.

NatWest has announced it will cut remortgage deals by up to 0.24% and selected mortgage deals by up to 0.07% tomorrow.

The bank will offer a five-year fixed rate remortgage deal for someone with a 90% loan-to-value at 5.30% down from 5.54%.

Meanwhile, mortgage owners with a 60% loan-to-value will be able to get a five-year remortgage deal for 4.48% down from 4.59%.

It comes after the latest inflation figures came in lower than expected, feeding expectations the Bank of England will drop its base rate sooner than expected.

The CPI measure for February stood at 3.4% – down from 4% in January and the lowest since September 2021.

Most economists had been expecting it to come in at 3.5%.

Inflation is now edging closer towards the Bank of England’s 2% target and ahead of the latest interest rate decision tomorrow.

The Bank is expected to hold its base rate at 5.25% but the latest fall in inflation could see it bring it down sooner than expected.

Lenders tend to price in their mortgages in anticipation of what the Bank will do in the future rather than immediately, hence NatWest’s decision to start slashing some of its mortgage rates.

Rohit Kohli, director at broker firm The Mortgage Stop, said borrowers would “see a little light at the end of the tunnel” after NatWest’s decision to slash rates.

But, he warned expectations the BoE will hold its base rate tomorrow could “dampen any hopes” NatWest’s decision to cut rates may have created.

Meanwhile, Ben Tadd, director at Lucra Mortgages, said other lenders could follow NatWest’s lead by dropping rates.

He added: “NatWest are the first big bank to act following the positive inflation numbers released this morning.

“Here’s hoping this could be the start of a new rate war in the mortgage market.”

Other brokers were more cautious, pointing to NatWest’s decision to up its tracker rates by up to 0.4%.

Gareth Davies, director at South Coast Mortgage Services, said: “It is intriguing to observe NatWest’s decision to raise the prices of tracker products, especially when these are experiencing a surge in demand.”

How to get the best deal on your mortgage

Snapping up the best mortgage deal depends entirely on what’s available at the time, but there are ways to get ahead of the competition.

Usually the larger the deposit you have the lower the interest rate you can get.

If you’re remortgaging and your loan-to-value ratio has changed, this could also give you access to better rates than before.

A change to your credit score, or an increase in your salary can also help you access better rates.

If you have a fixed rate, you could see higher rates when you come to the end of the current term after the BoE hiked interest rates from 2022 and into last year.

And if you’re nearing the end of a fixed deal in the next six months it’s worth contacting your broker now to lock in a rate.

If they come down between now and the end of your deal, you can always apply for another rate before you remortgage.

Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.

But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.

To find the best deal use a mortgage comparison tool to see what’s available.

You can also go to a mortgage broker who can compare for you, with most offering free advice to secure you the best deal for you.

Some brokers charge for advice, so ask them first.

It could cost a couple of hundred pounds but it might save you thousands on your mortgage overall.

You’ll also need to factor in fees for the mortgage, though some have none at all, or you can add it to the cost of the mortgage.

But, be aware that this means you’ll pay interest on it and it will cost more in the long term.

You can use a mortgage calculator to see how much you could borrow.

Remember, if you decide to remortgage to a new lender you’ll have to pass its affordability checks.

It may also check your credit file to check you have repaid previous debts.

You may also need to provide documents such as utility bills, proof of benefits, your last three months’ payslips, passports and bank statements.

It’s possible to avoid new affordability checks by remortgaging to a new deal with your existing lender, provided you don’t want to borrow more or extend your term.

Do you have a money problem that needs sorting? Get in touch by emailing money@the-sun.co.uk.

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