Respite for debtors as Bailey insists there is no such thing as a rush to hike rates of interest

Halifax and HSBC became the latest lenders to cut mortgage costs as Andrew Bailey appeared to rule out an interest rate hike this month.

In a move that offers further much-needed respite to borrowers, Halifax said it was reducing the rates on certain home loans by up to 0.35 percentage points.

HSBC also announced cuts after similar reductions by Santander and TSB this week. Analysts said it ‘feels like the start of a broader repricing’ in the market, but added that mortgage rates were higher than before the Middle East war erupted.

The moves came as Bailey said the Bank of England was ‘not going to rush’ to raise interest rates despite a ‘very big energy shock’ that will drive up inflation.

‘There are really difficult judgements to be made,’ the Governor told the BBC.

‘We’re not going to rush to judgements on those things, because there is a lot of uncertainty around this, not just how it’s going to play out, but also how it’s going to pass through into the UK economy.’ 

Halifax said it was reducing the rates on certain home loans by up to 0.35 percentage points 

According to finance markets bets, there is a 10 per cent chance of a rate hike this month, while a move in June is seen as 50-50.

Investors are now pricing in just one rate rise this year, having at one point bet on as many as four. 

Adam French, head of consumer finance at Moneyfacts, said: ‘Rising mortgage rates seem to have plateaued.’

He said the average two-year fix has edged down from 5.9 per cent to 5.88 per cent since Easter, while five-year deals have dipped from 5.78 per cent to 5.77 per cent.

However, the typical two-year fix is up from 4.83 per cent at the start of March, and 4.95 per cent for the five-year fix.

‘While rates could stay higher for longer as the Bank of England is likely to prioritise bringing inflation under control, a stuttering economy may give it pause for thought,’ said French.

Craig Fish, director at Lodestone Mortgages, said mortgage rate cuts were ‘genuinely positive’. He added: ‘But let’s keep things in perspective. 

‘Rates are still over 1 per cent higher than before the conflict began. We are a long way from where we were.’