Halifax, HSBC, Nationwide and TSB rate cuts further evidence that mortgage rates peaked in late July 

Four of the UK’s largest mortgage providers have announced cuts to their mortgage products signalling mortgage rates may have peaked.

Halifax, the country’s biggest lender, will reduce rates by up to 0.71 percentage points from Friday, bringing its five-year fixed deal down from from 6.10% to 5.39%.

Nationwide has reduced its rates by 0.55%, TSB has cut 5-year fixed residential mortgages by up to 0.4%, while HSBC today announced cuts of up to 0.35% on some two, three and five-year fixed rate products. 

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Nationwide, TSB and HSBC all announced cuts this week, quickly followed by Halifax whose new rates will come into effect from Friday. 

According to Moneyfacts.co.uk, the average two-year fixed residential mortgage rate today is 6.83%. This is unchanged from the previous working day, but below the peak of 6.86% seen on July 26.

The above mortgage rate figures from Moneyfacts do not include the change in rates from Halifax, meaning we can expect the average to dip when they kick in tomorrow.

Nick Mendes, mortgage technical manager at John Charcol said mortgage interest rates were now on a “downward trend”, but cautioned that any significant  improvement in the mortgage market was still a long way off. He said: “Core inflation remains close to a 30 year high, which is the area the bank of England is targeting to bring down so we should still expect more [Bank of England] rate rises in August and potentially September.

“It may be months before we start to see two-year fixed rates sub 5%, it took until early January following the mini budget fall out for fixed rates to settle and lenders competing to win business again.”

>>See also: House sales at weakest level since first Covid lockdown

According to Moneyfacts data, mortgage rates may have peaked late last month, with the highest daily rate for two-year fixed mortgages at 6.86% on the 26th July.

The move to cut mortgage rates comes a week after the Bank of England increased the Bank Rate to 5.25%, its 14th consecutive increase.

The results of today’s Royal Institute of Chartered Surveyors’ UK Residential Market Survey suggest higher mortgage rates are already impacting buyer activity.

Emily Williams, a director in the Savills residential research team, said: “The cuts in mortgage rates announced today by major lenders reflect the increasing – and much-needed - market certainty that the Bank of England base rate is nearing its peak.

“This will ease some of the affordability challenges faced by buyers and bring more confidence to the market, but we expect downwards pressure on pricing and activity to persist for the remainder of the year.”

Henry Jordan, director of home at Nationwide, said: “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.”

Rob Gill, managing director at mortgage broker Altura Mortgage Finance, said: “All eyes will now be on next week’s inflation figure, due on August 16th. 

“If this confirms a further fall in inflation, a mortgage price war in September cannot be ruled out as lenders seek to make up for a quiet July and August.”

Rachel Springall, finance expert at Moneyfacts said: “Interest rates on mortgages are much higher than some may realise, so borrowers will need to ensure they have surplus funds to meet higher repayments when they come off a lower rate deal.”

“Consumers struggling with their outgoings amid the cost of living crisis, or who have become a ‘mortgage prisoner’, would be wise to seek independent advice to review their situation. 

“Fixed rate mortgages, for two, five and 10-year terms are around 3% higher on average compared to December 2021.”