HSBC has cut mortgage rates again as lenders continue to compete for customers.
Fixed rates will come down by as much as 0.19 per cent, reduced for the third time in a month.
Smaller lender, Gen H, has also cut rates by up to 0.3 per cent. It follows weeks of providers cutting rates.
Last week, NatWest cut rates by 0.23 per cent, following Santander, Virgin Money and Clydesdale Bank.
Three weeks ago, the average two-year fixed mortgage was 5.97 per cent, and the average five-year deal was 5.53 per cent. Now it is 5.81 per cent and 5.41 per cent, respectively.
The reductions come the week before the Bank of England decides whether to cut interest rates from the current 16-year high of 5.25 per cent.
Justin Moy, managing director at EHF Mortgages, said: “With lenders definitely stepping up over the summer months, some healthy competition is starting to push rates down a little while we wait for positive news from the Bank. It’s time for the Monetary Policy Committee to act just like HSBC.”
However, most economists expect the rate will stay the same. This has led to concerns this may mean an end to the recent slew of cuts seen in the mortgage market but experts say there could still be more reductions to come.
Nick Mendes, of brokers John Charcol, said: “Lenders have been busy competitively repricing against each other over the last fortnight, with purchase rates significantly lower than remortgage rates.
“Purchase rates are highly competitive compared to market pricing, and I don’t anticipate any significant repricing in this area. However, remortgage rates still have room to decrease, and any significant reductions are expected to occur in this area.”
Many lenders cut rates following the stability of swap rates. These are based on long-term predictions for where the Bank of England interest rate – the increase the Bank charges on its lending to commercial banks – will go in the future.
Caitlyn Eastell, spokesperson at Moneyfactscompare.co.uk, said: “In recent times swap rates have been volatile and many providers have been making alterations to their mortgage ranges.
“It is a promising sign that we are seeing more lenders reducing fixed rates, especially from more prominent brands. Borrowers could expect to see some sub 4 per cent five-year deals enter the market in near future.
“After inflation remained at 2 per cent borrowers may be eager to see a base rate cut sooner rather than later.
“Initial expectation put a potential cut for August, however, with service inflation remaining high brokers have predicted a reduction may well be pushed back to September. Regardless, when the decision is made, providers will quickly begin making adjustments to their product ranges to reflect this.”
Lenders are not just cutting rates but also introducing new mortgages to help first time buyers on the market.
Skipton Building Society announced this week that it will provide a loan up to 5.5 times a first-time buyer’s income.
Meanwhile, a new lender, April Mortgages, is offering a range of five to 15-year fixed rates, lending up to six times sole and joint income to buyers.