Major lenders poised to reduce some mortgage rates

Nationwide Building Society, HSBC UK and TSB are expected to cut some home loan rates from Wednesday.

Some of Britain’s biggest lenders are poised to make mortgage rate cuts from Wednesday (Joe Giddens/PA) (PA Archive)

Some of Britain’s biggest lenders are poised to make mortgage rate cuts from Wednesday.

Nationwide Building Society has announced reductions of up to 0.55 percentage points on its fixed mortgage products from Wednesday.

HSBC UK is also expected to make rate cuts to residential mortgages on Wednesday, although the bank has not yet given details.

And TSB is making reductions of up to 0.40 percentage points to selected five-year fixed homeowner mortgages, with rates starting from 5.44%.

Swap rates, which underpin fixed mortgage rates, have stabilised amid expectations that inflation is cooling.

With swap rates having fallen from their early July peak and stabilised somewhat, we are now able to reduce rates for new customers

Henry Jordan, Nationwide Building Society

The Bank of England uses rises in the base rate as a tool to quell inflation and last week it raised the base rate from 5.00% to 5.25%.

UK Consumer Prices Index (CPI) inflation was 7.9% in June, slowing from 8.7% in May, according to the Office for National Statistics (ONS). This has fuelled expectations that the base rate may not need to climb so high.

Henry Jordan, director of home at Nationwide Building Society, said of the changes planned for Wednesday: “These latest changes build on the reductions we made last week for existing customers.

“With swap rates having fallen from their early July peak and stabilised somewhat, we are now able to reduce rates for new customers.”

Nationwide said that, for new customers moving home, it is making reductions of up to 0.45 percentage points across selected two-, three- and five-year fixed products.

For first-time buyers, it is making reductions of up to 0.55 percentage points across selected two-, three- and five-year fixed mortgages.

For remortgage customers, it is making reductions of up to 0.35 percentage points across selected two-, three- and five-year fixed loans.

However, rates on the society’s range of two-year tracker mortgages will increase by 0.25 percentage points, in line with product terms, given the recent base rate rise.

There have recently been some signs of average fixed mortgage rates on the market following a more stable trend, after previously jumping as inflation surged.

According to Moneyfactscompare.co.uk, the average two- and five-year fixed-rate home-owner mortgage rates on the market were unchanged on Tuesday compared with Monday, standing at 6.84% and 6.35% respectively.

Riz Malik, founder and director of R3 Mortgages, told website Newspage: “Many lenders repriced fixed-rate products downwards in the week before the base rate decision. Hopefully, this trend will continue.”

Jamie Lennox, a director at Dimora Mortgages, said: “The next inflation data is going to be key to this downward trend continuing.”