Friday, June 21, 2024

Fresh relief for homeowners as THREE lenders cut mortgage rates by up to 0.45%

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HOMEOWNERS have been handed a fresh boost as three major lenders gear up to slash mortgage rates.

TSB, Barclays and HSBC are all cutting rates on home loans by up to 0.45% from tomorrow.


Three major lenders are slashing their mortgage ratesCredit: Alamy

TSB is dropping rates on two and five-year first time buyer, home mover and two year fixed remortgage deals by up to 0.1%.

Barclays meanwhile is slashing rates on a range of products including five-year fixed deals by up to 0.45%.

HSBC is also dropping rates on over 40 home loan products, although it hasn’t said how much by.

The latest cuts come as the Bank of England (BoE) holds steady on its base rate.

Decision-makers on the Bank’s Monetary Policy Committee (MPC) opted to keep it at 5.25% last week – a 16-year high.

High street banks and lenders use the BoE base rate to set interest rates it offers customers on mortgages, loans and savings.

The BoE also uses base rate to control inflation, which stood at 3.2% in March.

The governor of the BoE, Andrew Bailey, said last week after the MPC announced its decision to keep base rate the same, there was “encouraging news” on inflation but “more evidence” it will stay low was needed before it would consider slashing rates.

But the BoE now expects inflation to fall below its 2% target by June and could eventually drop to 1.5% in 2026.

Analysts and investors now believe that rate cuts could arrive as early as June.

Best schemes for first-time buyers

Lenders tend to price in their mortgage deals ahead of any BoE cuts which may suggest why TSB, HSBC and Barclays are slashing rates now.

Lenders also try and preempt each other to snap up as much business before rates are cut.

Stephen Perkins, managing director of Yellow Brick Mortgages, said: “Excellent news this morning with rate reductions from both Barclays and HSBC, which will reinvigorate a mortgage market that has been languishing for too long.

“This could be the spark that starts another mini-rate war.”

It comes after NatWest cut mortgage rates in March, in anticipation of the BoE cutting rates.

However, others hiked rates after months of fluctuating swap rates, which underpin fixed-rate mortgages.

Expert reaction on lenders cutting rates

A NUMBER of mortgage experts have hailed the news TSB, HSBC and Barclays will slash rates as a positive sign for the upcoming months…

Dariusz Karpowicz, director at Albion Financial Advice, said: “Such rate cuts are particularly welcome at a time when the market has been under significant pressure, offering some relief to both new buyers and those looking to remortgage.

“It’s a hopeful sign that lenders are beginning to adjust their offerings in a way that could make homeownership more accessible and affordable.

“If other lenders follow suit, we could see a more competitive mortgage market, benefiting borrowers across the board.”

Craig Fish, director at Lodestone Mortgages & Protection, said: “Just recently we have seen SWAP rates reducing in line with the positive commentary and data emerging from the Bank of England.

“Even if they aren’t all ready to reduce rates yet, we do at last have a lender that is on the side of borrowers.

“These reductions from Barclays are good ones, and I now expect more of the major lenders to follow.”

Michael Bennison, partner at Bennison Brown, said: “It’s fantastic to see one of the Big 6 reduce mortgage rates, hopefully its the start of rate reduction season, with HSBC also following.

“The recent positive commentary from Andrew Bailey following the Bank of England meeting, along with the news yesterday that inflation in America has fallen will hopefully bring some spring sunshine to the mortgage market.”

With analysts forecasting the BoE will start cutting rates from next month, it could be more likely now compared to earlier in the year other lenders will follow TSB, HSBC and Barclays.

How to get the best deal on your mortgage

Snapping up the best mortgage deal depends entirely on what’s available at the time, but there are ways to get ahead of the competition.

Usually the larger the deposit you have the lower the interest rate you can get.

If you’re remortgaging and your loan-to-value ratio has changed, this could also give you access to better rates than before.

A change to your credit score, or an increase in your salary can 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 hiked interest rates from 2022 and into last year.

And if you’re nearing the end of a fixed deal in the next six months it’s worth contacting your broker now to lock in a rate.

If they come down between now and the end of your deal, you can always apply for another rate before you remortgage.

Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.

But depending on the cost and how much you could save by switching versus sticking, it might be worth paying to leave the deal. Make sure you compare costs first.

To find the best deal use a mortgage comparison tool to see what’s available.

You can also go to a mortgage broker who can compare for you, with most offering free advice to secure you the best deal for you.

Some brokers charge for advice, so ask them first.

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 none at all, or you can add it to the cost of the mortgage.

But, be aware that this means you’ll pay interest on it and it will cost more in the long term.

You can use a mortgage calculator to see how much you could borrow.

Remember, if you decide to remortgage to a new lender you’ll have to pass its affordability checks.

It may also check your credit file to check you have repaid previous debts.

You may also need to provide documents such as utility bills, proof of benefits, your last three months’ payslips, passports and bank statements.

It’s possible to avoid new affordability checks by remortgaging to a new deal with your existing lender, provided you don’t want to borrow more or extend your term.

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