Mortgage rate cuts continue: HSBC and TSB are the latest to cut mortgage costs
- The lowest five-year fixed-rate mortgage has fallen from 4.28% to 3.83% since July 1
The mortgage rate war continues to rage, with Barclays, HSBC and TSB among the latest lenders to cut mortgage rates.
This follows weeks of rate cuts, with the lowest five-year fixed-rate mortgage rate falling from 4.28 percent to 3.83 percent since early July.
Meanwhile, the lowest fixation rate of the past two years has fallen from 4.68 percent to 4.22 percent.
Three in one day: Three major lenders have announced they will cut their interest rates starting tomorrow
Although there are now eight lenders offering fixed interest rates below 4 percent for five years, mortgage amounts are still much higher than what many borrowers are used to.
According to UK Finance, there are around 700,000 fixed rate deals expiring in the second half of this year, many of which will be at rates of around 2 per cent or less.
And although the lowest rates are now below 4 percent, the average fixed interest rate on the market is still above 5 percent.
According to interest rate checker Moneyfacts, the average five-year fixed rate mortgage rate is currently 5.27 per cent and the average two-year fixed rate mortgage rate is 5.64 per cent.
What will change tomorrow?
From tomorrow, HSBC is implementing a number of interest rate cuts on its fixed-rate products, specifically for homebuyers, first-time homebuyers, landlords and people refinancing their mortgages.
While rates won’t be made public until tomorrow, borrowers can expect improvements across a wide range of deals, including fixed loans with two-, three- and five-year terms.
The interest rate cuts will benefit not only those with the largest deposits, but also those buying with a deposit of 5 or 10 percent.
Nicholas Mendes, mortgage technical manager at broker John Charcol, thinks HSBC’s rate cuts from tomorrow could signal a best buy policy.
“HSBC’s recent rate hike comes as no surprise given similar moves by other major lenders,” Mendes said.
‘Given the competitive nature of the mortgage market, it was only a matter of time before HSBC adjusted its rates in response to broader market trends.
“This move is strategically aligned with the bank’s efforts to remain competitive and potentially position itself as a new best buy.”
TSB has also announced cuts of up to 0.25 percentage points on its two-, three- and five-year fixed interest rates for homeowners, movers and first-time homebuyers. The new rates come into effect tomorrow.
Justin Moy, director at EHF Mortgages, told the Newspage news agency: ‘TSB is very successful at the moment.
‘Further mortgage rate cuts are good news for borrowers as the market will encourage more activity among home buyers and first-time buyers, improving affordability and keeping the housing market afloat.
‘Those looking to refinance their mortgages will need to be patient, as interest rates will eventually rise again. But given the low number of home transactions, lenders are clearly keen to push the boundaries where possible.’
Barclays is also cutting rates on a number of internal product transfer deals from tomorrow, despite already offering some of the best deals on the market.
The lowest five-year fix currently stands at 3.84 per cent with a fee of £899. On a £200,000 mortgage repaid over 25 years, that would mean you would pay £1,038 a month.
However, Barclays is also withdrawing three of these products aimed at home buyers, including the 4.14 percent fixed rate for five years for buyers with a 25 percent deposit and the 4.37 percent fixed rate for five years for buyers with a 15 percent deposit.