Mortgage rates are starting to fall, giving homeowners a glimmer of hope
Homeowners have had a glimmer of hope as a handful of banks and building societies slashed mortgage rates last week.
Nationwide, interest rates fell by up to 0.35 percentage points on Friday after HSBC became the first major lender to cut its deals on Wednesday, slashing rates by an average of 0.15 percentage points.
This is the first cut from major banks in more than a month.
A glimmer of hope: Experts no longer expect interest rates to be raised so aggressively in the coming year as inflation begins to ease
However, the average two-year fixed rate contract remains higher than at the beginning of the month.
It rose from 6.39 percent on July 1 to 6.83 percent last Thursday, according to market monitor Moneyfactscompare.
Two-year fixes peaked at an average of 6.86 percent last Wednesday.
The Bank of England’s Monetary Policy Committee will make its next key interest rate decision on Thursday.
Experts are predicting another rise, but no longer expect interest rates to be raised as aggressively in the coming year as inflation begins to ease.
Nicholas Mendes of mortgage broker John Charcol: ‘There is certainly an atmosphere of optimism, but it is important to create expectations.
‘Customers will stagnate in the coming weeks with their reductions to prevent them from quickly becoming market leaders, because then there will be an unmanageable influx of requests.’
According to Barclays, one in four homeowners pays too much on their mortgage in an attempt to pay off as much as possible before they get stuck in a higher interest rate.