A GROUP of banks and building societies have slashed interest rates on mortgages in a relief to homeowners.
Major lenders including NatWest, Halifax and Virgin Money have all made reductions to the cost of servicing loans as inflation begins to slow.
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It comes after inflation figures last week revealed prices are rising by 7.9% compared to 8.7% the previous month.
The slowdown has led to expectations the Bank of England (BoE) will not increase its base rate, a measure it takes to slow inflation, by as much as expected.
This is good news for mortgage rates, as a higher BoE base rate has a negative knock-on effect on home loans.
Lenders also often amend their mortgage rates in anticipation of what will happen to the BoE rate.
The BoE’s Monetary Policy Committee is next meeting on August 3 when it will announce a new rate.
Nationwide has reduced its rates by up to 0.35% and HSBC has cut rates by the same amount.
Meanwhile, TSB has lowered its fixed-term mortgage rates by up to 0.55%.
It comes as Moneyfacts said the average two-year fixed mortgage rate currently stands at 6.81%, down from 6.83% yesterday.
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Meanwhile, today’s average five-year fixed residential mortgage rate is 6.34%.
Here is the full list of banks and building societies slashing rates:
Nationwide
Nationwide Building Society has reduced rates on five of its switcher mortgage products by up to 0.35%.
Switcher mortgages are only available to existing customers coming to the end of their existing fixed-term deal and looking for a new one.
The lender has cut its five-year fixed rate 60% loan-to-value (LTV) with £999 fee product to 5.24%, a fall of 0.25%.
Meanwhile, its two-year fixed rate at 60% LTV without a fee is now 5.99%, a drop of 0.35%.
HSBC
HSBC has cut rates on its residential mortgages by an average by up to 0.35%.
The bank is offering a two-year fixed rate deal at 60% LTV with a £999 fee at 6.14%, down by 0.10%.
Meanwhile, the lender’s five-year fixed rate deal at 85% LTV with £999 fee is 5.74%, down by 0.20%.
HSBC is also now offering two and five-year remortgage deals with free legal fees or £300 cashback.
Since these changes came into force, the bank announced further cuts of around 0.18% from August 2.
TSB
TSB has reduced rates on some its two-year fixed term deals by up to 0.55%.
A spokesperson said rate reductions are available on products for first-time buyers, people moving home and those remortgaging.
Yorkshire Building Society
Yorkshire Building Society has slashed rates on a number of its fixed-term mortgage deals by up to 0.30%.
The lender is even offering reduced rates on some products with a 95% LTV.
Meanwhile, it has a number of deals for first-time buyers giving £2,000 cashback.
Coventry Building Society
Coventry Building Society has slashed rates on some of its fixed-term two and five-year mortgage deals.
The lender is currently offering a two-year fixed-rate deal at 75% LTV and a £999 fee at 6.23%.
Meanwhile, its five-year fixed rate with 65% LTV and a £1999 product fee is at 6.32%. It also comes with the option of £350 cashback.
M-Powered
M-Powered has reduced rates on its five-year fixed-term products by 0.15%, starting from 5.49%.
The lender is also offering selected two-year fixed products with up to £1,000 cashback.
NatWest
Those buying or remortgaging with NatWest are now set to see a drop of up to 30% on certain mortgage products.
The bank’s current cheapest five-year fixed rate of 5.84% is expected to fall to around 5.64%.
These changes have been announced to come into force on August 2.
Virgin Money
Virgin money will be introducing cuts of up to 0.41 points on August 2.
However, this will only apply to some of its loans deals.
The changes will affect both new and existing customers.
Halifax
Halifax announced a smaller 0.18 point reduction, coming into force the same day.
Likewise, all customers will be able to benefit.
However, this will only apply to it five-year fixed mortage.
Will mortgage rates fall further?
In June, the Bank of England hiked its base rate to 5% from 4.5% the month before.
But after June’s lower-than-expected inflation figures, it is expected the next rise won’t be as severe as previously expected.
Nicholas Mendes, from mortgage advisers John Charcol, said slowing inflation might see lenders working lower rates into their fixed-term deals.
He said: “It will hopefully have a positive impact on future market forecasts, and a calming to the recent volatility in fixed rates.
“It will take a few months before we see any substantial decreases in fixed rate pricing.
“The advice will be for mortgage holders unsure on their next move to speak to a broker or their lender.”
Rhys Schofield, mortgage adviser at Peak Mortgages, echoed this.
He said: ” Lenders generally over-egged where they thought interest rates would end up and now it looks like they may not rise quite as high or as fast they can row back on some of their price increases.
He added: “Now the market has settled down a bit more, expect lenders to try and compete a bit more.”
How to get the best deal on your mortgage
There are a number of ways to land the best mortgage deal.
In most cases, the larger the deposit you have the lower the rate you can get.
Meanwhile, a positive change to your credit score or a higher salary could also help you access better rates.
If you have a fixed rate, you could see higher rates when you come to the end of the current term after the BoE rate rises.
And if you’re nearing the end of a fixed deal soon it might be worth looking for a new deal now.
You can lock in current deals sometimes up to six months before your current deal ends.
Bear in mind, leaving a fixed deal early will usually come with an early exit fee.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
You can find the best deal using a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare deals for you, but you may have to pay for this service.
It could cost a couple of hundred pounds but it might save you thousands on your mortgage overall.
You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember, that you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks, and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
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