Relief for mortgage-payers as big banks start to cut mortgage prices

Mortgage-payers have been given a boost with big banks starting to cut rates – as Jeremy Hunt sounds a bullish note on Britain’s prospects.

HSBC, Barclays and TSB have all declared they are trimming the cost of home loans, amid growing optimism that the Bank of England will start lowering the base rate soon.

The positive signs are a boost for the Chancellor as he ramps up for the looming general election battle.

In a speech this morning, Mr Hunt will insist the tax burden will reduce if the Tories remain in power. But he is warning that if Keir Starmer gets the keys to No10 he will have to raise taxes ‘as sure as night follows day’.  

The lenders’ move comes just days after the Bank of England indicated it could lower interest rates as soon as next month.

HSBC is reducing mortgage rates on more than 100 of its fixed deals – with two, five and ten-year terms – for homeowners as well as landlords.

Meanwhile, Barclays is cutting rates on some of its deals by up to 0.45 percentage points. The rate on one of its five-year fixes, for borrowers remortgaging with a 40 per cent deposit, will go down from 4.77 per cent to 4.32 per cent. TSB has lowered rates on some two and five-year deals by up to 0.1 percentage points.

Mortgage rates are set independently, but they tend to anticipate the market’s view of the path of the Base Rate, which is currently 5.25 per cent.

But last week the Bank of England gave its clearest signal yet it could cut its rate this summer. Governor Andrew Bailey said the fight against inflation was ‘moving in the right direction’ and did not rule out that a cut could come as soon as June.

Setting out the ‘big divide’ for the coming election, Mr Hunt will insist that only the Conservatives are committed to reducing the tax burden, which already stands at a post-War record and is set to rise further.

The Chancellor will acknowledge that the Government has had to raise taxes to pay for the cost of Covid and energy support schemes. But he will accuse Labour of hypocrisy for criticising tax rises needed to fund policies it had supported, such as the furlough scheme.

‘It is playground politics to use those tax rises to distract debate from the biggest divide in British politics, which is what happens next,’ he will say.

‘Conservatives recognise that whilst those tax rises may have been necessary, they should not be permanent. Labour do not.

‘We are prepared to do the hard work to bring taxes down because we know that doing so will lead to more growth for the economy and more prosperity for British families.’

Mr Hunt will point out that the shadow chancellor Rachel Reeves failed to mention the tax burden during her Mais lecture, in which she set out her vision for the economy. Ms Reeves has said she wants to see lower taxes for ‘working people’ in the long term.

The Chancellor will release new Treasury analysis of Labour’s tax plans, which is expected to show they will be billions of pounds short of the funding they need to deliver their spending commitments.

Further doubts emerged last night when the shadow environment secretary Steve Reed acknowledged that the price tag for Sir Keir’s plan to create a publicly owned Great British Energy could cost more than £80billion.

Labour later said three-quarters of the cash would come from the private sector, but Energy Secretary Claire Coutinho said this would still leave the taxpayer with a £20billion bill — dwarfing Labour’s official estimate of £8billion.

Labour yesterday insisted its policy pledges are ‘fully costed’. But new Treasury analysis today is expected to raise questions about whether their publicly acknowledged tax changes will raise as much as they claim.

Mr Reed last night raised concerns about the cost of Labour’s flagship energy plan. Trade unions have estimated the plan could cost £82billion over a decade.

Asked whether the estimate was accurate, Mr Reed told LBC Radio: ‘Well it may well be… this isn’t supposed to be a delivery plan for energy, this is just a first step.’

Labour last night stood by its costing of £8.3billion, saying that Mr Reed ‘misspoke’.