HSBC and NatWest have recently announced a new wave of mortgage rate cuts, and it is expected that other major lenders in Britain will follow suit. This move will bring some relief to financially strained Britons.
HSBC will be reducing rates across many of its new fixed products, including deals for first-time buyers, home movers, and those looking to remortgage. The full details of these reductions will be published on Tuesday. NatWest has also announced that it will be cutting rates from Tuesday.
These rate cuts will create better conditions for homebuyers and individuals seeking to switch to a new mortgage deal. NatWest, for instance, will be reducing rates by up to 0.35 percentage points on selected fixed deals. For a five-year fixed rate deal aimed at homebuyers with a 5% deposit, the rate will be cut from 6.39% to 6.04%.
Mortgage costs had been steadily increasing for months, but since the second half of July, UK lenders have been lowering their rates. This came after it was revealed that UK inflation fell more than expected in June, leading to speculation that the Bank of England would not raise interest rates to the extent previously anticipated. Currently, the Bank’s base rate is 5.25% after a hike from 5% in August.
Nicholas Mendes, a mortgage technical manager at the broker John Charcol, stated that HSBC’s rate reductions indicate their seriousness, as they have made a second rate cut within a week and have also introduced changes to extend mortgage terms to 40 years.
Accord Mortgages, a part of Yorkshire Building Society, has also confirmed that it will be cutting all of its fixed rates by 0.20 percentage points from Tuesday. Similarly, Nationwide Building Society reduced some of its fixed and tracker rates by up to 0.15 percentage points last week.
This series of rate cuts is beginning to feel like an avalanche, according to Stephen Perkins, the managing director of Yellow Brick Mortgages. He believes that more reductions will follow throughout the week as other lenders follow suit.
Lewis Shaw, the owner of Shaw Financial Services, commented that with NatWest following HSBC’s lead, there is a high possibility that the remaining big four lenders in the UK, namely Lloyds Banking Group, Barclays, Nationwide, and Santander, will also join in the rate cuts.
Shaw stated, “It seems that lenders are struggling to attract new business, and reducing rates is their only viable option.”
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