Mortgage Rates: UK Lenders Slash Prices Amidst Uncertain Times
The UK mortgage market is in a constant state of flux, with lenders battling for business amid economic uncertainty and rising inflation. This week has seen a flurry of activity, with major players like Halifax, NatWest, and Virgin Money making significant cuts to their fixed-rate deals.
Halifax has cut selected two and five-year fixed rates for purchase and remortgage by up to 0.22 percentage points. The bank is now offering a market-leading five-year fixed rate for purchase at 4.05% with a £999 fee, for borrowers with at least a 40% deposit. For remortgage borrowers, Halifax has a five-year fixed rate at 4.43% with a £999 fee (75% loan to value) and a three-year fix at 4.52% with the same fee (60% LTV). Its two-year remortgage fixed rate falls to 4.67% (60% LTV) with a £999 fee.
NatWest Bank has reduced residential fixed rates by up to 0.23 percentage points, and buy-to-let rates by as much as 0.16 percentage points. The lender is offering a two-year fix for purchase at 4.58% (previously 4.72%) with a £1,495 fee, for borrowers with at least a 40% deposit. The equivalent five-year fixed rate has fallen to 4.14% (previously 4.29%). The bankâs residential remortgage rates have been cut by up to 0.18 percentage points. Five-year fixed rates now start from 4.3% with a £1,495 fee (60% loan to value), down from 4.36%. NatWest has also cut selected five-year buy-to-let fixed rates for remortgage. It is offering a five-year deal at 4.5% with a £3,499 fee, down from 4.66%.Â
Virgin Money has cut selected high loan to value fixed rates by up to 0.15 percentage points, effective from today (22 July) at 8pm. Two and five-year fixed rates for purchase and remortgage, for borrowers with at least a 20% cash deposit or equity (80% LTV), will see reductions. Among the new rates offered by Virgin will be a five-year fixed rate for remortgage at 80% LTV at 4.8% with an £895 fee.
Lenders are looking ahead to the Bank of Englandâs decision on interest rates, which is due tomorrow (1 August). While some experts believe the Bank will cut the benchmark Bank Rate (which has been at 5.25% since August 2023), by a quarter percentage point to 5% tomorrow, other pundits predict the first rate cut wonât come until September.
Despite the potential for rate cuts, many borrowers are facing significantly higher mortgage payments, particularly those coming to the end of their fixed rate deals. The Bank of England estimates that around five million homeowners will see their monthly mortgage payments rise between now and 2026. The average jump in monthly repayments will be around £180 â a 28% rise on a typical £650 repayment.
The Bank published figures this week showing net mortgage borrowing rose to £2.7bn in June, up from £1.3 billion in May, suggesting a rebound in confidence in the housing market.
Mortgage approvals for home purchase were stable at 60,000 in June, the figure was the same in May and 60,800 in April, this year. Remortgage activity fell marginally from 29.300 in May to 27,500 in June.
However, a report published by the Institute for Fiscal Studies says 320,000 households have been pushed into poverty due to significantly higher mortgage rates. The data shows borrowers who have remortgaged or taken out new mortgages since 2022 have experienced sharp falls in their disposable income as higher interest rates have pushed up housing costs.
The market is in a state of flux, with lenders constantly adjusting their rates to reflect changing conditions. It's a good time to speak to a mortgage advisor to understand your options and ensure you're getting the best deal possible.
