Brokers predict ‘mortgage price war’ as lenders including HSBC and Nationwide cut rates again
Brokers have suggested there could be a “mortgage price war” as lenders continue to reduce rates amid hopes inflation is finally on the way down.
Nationwide reduced prices on some of its fixed products by up to 0.55 percentage points while HSBC reduced rates by up to 0.2 percentage points. TSB also lowered rates by up to 0.4 percentage points.
TSB’s cheapest five-year deal will be 5.44 per cent while those remortgaging with a a 40 per cent deposit will be able to get a 5.64 per cent deal at Nationwide.
Customers remortgaging at HSBC on a five-year fixed rate with a 60 per cent LTV can secure a deal at 5.49 per cent.
The rate reductions come shortly after the trio of lenders reduced rates at the end of July.
Halifax also announced a series of updates to its offers which will go live from Friday, with brokers predicting that more banks would reduce rates in the coming weeks.
“More lenders are likely to follow this trend, and we may even see further rate reductions from those lenders who have already lowered rates,” Chris Sykes at Private Finance said.
Mortgage rates have rocketed upwards over the last two months or so due to signs that high inflation had become entrenched in the UK.
However, a faster than forecast fall in UK inflation in June sparked hopes that the Bank of England will not have to hike rates as far as many had feared only a month ago.
Financial markets now think the central bank is on course to send borrowing costs to a lower peak of 5.75 per cent compared to 6.25 per cent before June’s inflation data.
With July’s inflation out next Wednesday, analysts suggested that there would likely be further rate reductions to come.
Rob Gill, managing director at mortgage broker Altura Mortgage Finance, said that if next week’s data confirmed a further fall then there could be a “mortgage price war in September”.
The average rates available decreased very slightly on the day before, with the typical two-year fixed rate falling to 6.83 per cent from 6.84 per cent yesterday and the five-year falling to 6.34 per cent from 6.35 per cent.
Although prices were falling, Sykes noted that rates had not fallen as fast as they had increased. “As one would expect with most price movements, we have noticed lenders are slower to decrease rates than they were to increase these,” Sykes said.