Lenders are continuing to drop the cost of their mortgages as speculation grows that the Bank of England could opt to cut the interest rate for the first time in four years next week.
Earlier this week, Nationwide reintroduced sub-4% fixed rate mortgages as it cut rates by up to 0.25% across its two-, three-, and five-year fixed rate products.
Now, Barclays and TSB have become the latest lenders to cut fixed-rate deals, with a summer price war appearing to intensify ahead of the Bank of England interest rate decision on Thursday 1 August.
Barclays announced cuts of up to 0.1% to a wide range of its residential purchase and remortgage deals, effective from today (26 July). The lender is offering a five-year fixed rate for home purchase at 4.04%, with an £899 fee, for borrowers with at least a 40% cash deposit (60% loan to value), while Barclays Premier Banking customers can get the same deal at 4.03%.
TSB, meanwhile, has lowered selected fixed rates for new and existing customers by up to 0.2%, effective from today. The lender is offering a two-year fixed rate for home purchase from 4.54% with a £995 fee, or at 4.14% over five-years, with the deal requiring at least 40% cash deposit.
A number of other lenders have also reduced borrowing rates this week, including Skipton, Mpowered Mortgages and Atom Bank.
Nick Mendes, mortgage broker at John Charcol, said: “The rate reductions we’ve seen this week are great news for borrowers and reflect strong market competition and confidence that there will soon be a reduction to the Bank of England base rate.
“These latest reductions will provide significant savings for those looking to secure a mortgage or remortgage, making it an opportune time to consider locking in a fixed rate.”
There appears to be growing confidence that the Bank of England will cut interest rates next week. A Reuters poll of economists found the majority expected the monetary policy committee to vote in favour of a drop in the base rate from its current 15-year high of 5.25%. Some 49 out of 60 – over 80% – of respondents to the survey, held over 18-24 July, believed a cut would be made.
The latest falls in mortgage rates and speculation surrounding the Bank of England’s next move coincide with a new report from the Institute of Fiscal Studies claiming that as many as 320,000 UK adults had been pushed into poverty by rising mortgage costs following 14 hikes in the base rate over the last two years.
