NatWest and HSBC have announced that they will be cutting mortgage rates in a move that could potentially lead to a five-year fix rate below 5%. The rate cuts come as mortgage brokers anticipate further reductions as banks compete for business. One broker even hopes for a low 4% five-year rate by the end of the year.
HSBC will be reducing rates across various deals aimed at first-time buyers, home movers, and remortgagers. However, the specific new rates will not be confirmed until tomorrow. Similarly, NatWest will also be cutting some of its rates for home movers, first-time buyers, and remortgagers, although the majority of its products will see minimal improvement.
Accord Mortgages, another lender, will also be reducing all of its fixed rates by 0.2 basis points starting tomorrow. Nicholas Mendes, a mortgage technical manager at broker John Charcol, believes that lenders are competing for business and this is helping drive rates down. Mendes states that it will be interesting to see if any of today’s lenders make further changes before the end of the week to stay ahead.
As of September 4, five-year fixed-rate deals averaged 6.19%, while the average two-year fixed rate was 6.7%. Although rates have come down somewhat in recent weeks, they are still higher compared to June 1 figures of 5.17% and 5.49%. Mendes expects the downward trend to continue, with five-year fixed rates steadily decreasing over the next few weeks. He hopes to see rates starting with 4% and potentially even reaching low 4% by the end of the year.
Mendes also expects two-year fixed rates to fall, but borrowers may still have to pay above 5% until the end of the year. He advises those with an upcoming remortgage to plan ahead and speak to a mortgage broker at least seven months before their fixed rate expires. Fixing into a new deal six months before the rate expires can help secure a favorable deal, and if rates happen to go down, borrowers can switch to a better rate. It is important to understand how these changes could impact your budget.
In conclusion, the mortgage market is experiencing rate cuts as HSBC, NatWest, and Accord Mortgages compete for business. While rates have come down in recent weeks, they are still higher compared to earlier this year. However, experts expect the downward trend to continue, with the potential for rates below 5% in the future. Planning ahead and speaking to a mortgage broker can help borrowers secure the best possible deal.
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