HSBC, Barclays and Yorkshire BS newest to chop mortgage rates of interest
- It follows similar moves from Santander and Halifax earlier this week
Three more mortgage lenders have announced they are cutting mortgage rates, in another shift downwards for home loan costs.
Barclays, HSBC and Yorkshire Building Society have all reduced their rates, following Santander and Halifax earlier this week.
Yorkshire BS has cut its mortgage rates by up to 0.2 percentage points.
Going down: HSBC is one of three lenders to have reduced its mortgage rates
Both HSBC and Barclays’ rate changes mean they offer some of the lowest interest rates on the market.
HSBC is offering a 4.39 per cent five-year fix to those remortgaging with at least 40 per cent equity in their home. The deal comes with a £998 fee.
For those buying with a 25 per cent deposit, HSBC is now offering the lowest rate on the market.
Its 4.37 per cent five-year fix comes with a £649 fee. Someone buying with a £200,000 mortgage being repaid over 25 years will pay £1,099 a month with this HSBC product.
Given that the average five-year fix is 5.51 per cent, that represents a monthly saving of £130.
Barclays is also offering a host of competitive deals, with its five-year fixes starting from 4.23 per cent and its two-year fixes starting from 4.68 per cent.
Yorkshire BS’ changes, although not quite as dramatic, are aimed at both buyers and homeowners.
Homeowners with 25 per cent equity in their home, remortgaging to a five year fix with Yorkshire BS can now get a rate of 4.69 per cent with a £495 fee, down from 4.89 per cent.
And home buyers with a 25 per cent deposit can secure a two-year fix at 4.89 per cent with a £1,495 fee, down from 4.99 per cent.
Mortgage rates have been falling from their highs in summer 2023, when they reached 6.86 on a two-year fix and 6.35 per cent on a five-year fix.
Cuts have accelerated in recent weeks and the average two-year fixed mortgage rate today is 5.93 per cent, while the average five-year fixed mortgage rate today is 5.51 per cent.
Stephen Perkins, managing director at Yellow Brick Mortgages told news agency, Newspage: ‘Two more high street banks are throwing their hat into the ring for cheapest mortgage rates, hoping borrowers vote for them as their lender of choice.
‘HSBC and Barclays both announcing rate reductions for Friday following Santander, Natwest and Halifax earlier in the week, is starting to give the mortgage market real momentum.’
Ranald Mitchell, director of Charwin Mortgages sees things a little more dramatically.
He added: ‘This isn’t just another rate cut: it’s a declaration of war that will hopefully rage on for the foreseeable.
‘Both lenders are sharpening their strategies, ready to lead the charge and outflank the competition.
‘While battles are seldom cheered, many homebuyers and mortgage holders will be hoping this one escalates into a full-blown campaign, bringing significant benefits in its wake.’
Why are mortgage rates falling?
Mortgage rates are falling due to shifting expectations around the future of interest rates. Market interest rate expectations are reflected in swap rates.
These swaps are influenced by long-term market projections for the Bank of England base rate, as well as the wider economy, internal bank targets and competitor pricing.
As of 2 July, two-year swaps are at 4.48 per cent and five-year swaps are at 3.98 per cent.
This is down from a month ago when two-year swaps were at 4.61 per cent and five year swaps were at 4.05 per cent.
Nicholas Mendes, mortgage technical manager at broker, John Charcol believes that swaps are not the only factor influencing rate cuts at the moment.
He believes a lack of activity across the mortgage market is also driving lenders to try and attract new business.
Mendes says he is expecting the rate war to continue for a further two weeks before another lull ensues.
He said: ‘Since the general election was called, the swaps market has seen only marginal decreases, but a dip in activity has occurred as prospective buyers wait in hopes of new Government incentives like increased stamp duty thresholds or more options for first-time buyers.
‘Lenders have also delayed making reductions, aiming to balance potential volatility in swaps.
‘Consequently, lenders have held rates longer than preferred and are now repricing as the election concludes.
‘These factors have led to a decrease in purchase and remortgaging activity, with lenders trying to make up for lost time by capturing as much market share as possible.
‘Despite the absence of a bank rate decrease, the margin exists to allow for reductions.
‘We can expect about two weeks of repricing before a pause, as lenders adjust their margins to suitable levels. However, some high street lenders may continue competing for volume.’
