Several major banks have recently reduced their mortgage rates following a period of increasing costs attributed to the recent Iran war. HSBC is planning to implement rate cuts on its residential and buy-to-let mortgages starting Friday, with details to be revealed upon launch.
Additionally, TSB is set to lower rates on its two-year fixed house purchase mortgages by up to 0.45 percentage points on Friday, although some other TSB mortgage rates will see increases, particularly on product transfer deals and additional borrowing.
Halifax has also announced a decrease in fixed rates for home mover and first-time buyer mortgages by a maximum of 0.35% on Friday. Meanwhile, Santander made reductions of up to 0.28 percentage points on select mortgage products on Thursday, marking the first significant rate cut by a major lender since the beginning of the Middle East conflict.
The reduction in borrowing costs by Santander follows a decline in swap rates, which lenders use to determine loan pricing. According to the latest data from Moneyfacts, the average two-year fixed mortgage rate on Thursday morning was 5.88%, slightly lower than Wednesday’s rate of 5.89%. The average five-year fixed-rate remained steady at 5.77%.
Since the start of March, the average two-year fixed-rate mortgage was at 4.83%, while the average five-year fixed-rate deal stood at 4.95%. The increase in mortgage rates was fueled by concerns over potential inflation spikes due to the Iran war, leading to expectations of prolonged high interest rates by the Bank of England.
Moneyfacts reported a total of 6,665 homeowner mortgage products available on Thursday, suggesting that rates may have stabilized. Product availability has been improving, with 809 deals returning to the market since hitting a low point on March 24.
Adam French, Moneyfacts’ head of consumer finance, noted that average mortgage rates have remained steady post-Easter, indicating a plateauing trend in rising rates. Despite some recent rate cuts by lenders like Santander, Atom Bank, and Skipton Building Society, uncertainty in the Middle East and the potential impact of ‘Trumpflation’ continue to pose risks to borrowers, underscoring the fragile nature of the path to cheaper borrowing.