Five major mortgage lenders to cut rates

Five more mortgage lenders have announced they will be slashing rates – but experts warn borrowing costs may not keep falling for long. 

From tomorrow, HSBC, Santander, TSB, NatWest and Principality Building Society will lower rates as the price war between lenders continues. 

HSBC’s rate cuts will impact both residential and buy-to-let customers, and the move marks the second time the lender has reduced mortgage rates in two weeks. The bank won’t announce the exact cuts it will make until tomorrow.  

Santander is also reducing its residential fixed rates for the second time this month – this time by up to 0.14 percentage points.

Households remortgaging to Santander with at least 40 per cent equity in their home will be able to secure a two-year 3.8 per cent rate with a £999 fee attached. 

On a £200,000 mortgage being repaid over 25 years that would equate to paying £1,055 a month. 

TSB is lowering rates by up 0.15 percentage points for home buyers, remortgaging households and buy-to-let landlords.

Despite the recent spate of cuts, mortgage industry insiders say rates may not keep going down for long, especially if there are property tax changes in the Budget. 

Ranald Mitchell, director at Norwich-based Charwin Mortgages, told the news agency Newspage: ‘For borrowers, this is the time to act decisively, securing a deal while the competition is still driving rates down. 

‘If confidence takes another hit post-Budget, the lending landscape could look very different indeed. Any knock to post-Budget confidence could easily send borrowing costs back the other way.’

Nicholas Mendes, mortgage technical manager at John Charcol thinks mortgage rates are likely to stay within a narrow range over the coming months. 

‘Lenders may trim rates further if inflation data continues to soften or if fiscal tightening hits growth harder than expected, but the era of sharp repricing appears to be over,’ says Mendes. 

‘The market is showing little appetite for aggressive rate cuts. Fixed rates around the mid-threes to low fours are likely to be the new normal for prime borrowers: sustainable, affordable, and far removed from the panic of 2022.’

Principality Building Society will cut its rates by up to 0.13 per cent.  

NatWest is focussing this round of rate cuts on landlords, launching some low buy-to-let rates combined with higher arrangement fees.

From tomorrow its lowest two-year fix for a buy-to-let purchase with a 25 per cent deposit will be 3.43 per cent with a £3,999 fee.

On a £200,000 interest only mortgage that would equate to paying £571 a month.

Someone opting to fix for five years can either get a 3.9 per cent rate with a £3,999 fee, a 3.8 per cent rate with a £4,999 fee or a 3.7 per cent rate with a £5,999 fee.

This puts them in direct competition with smaller lenders offering low rates.

Aaron Strutt of broker Trinity Financial said: ‘It is quite surprising to see lenders like NatWest launch such cheap buy-to-let rates, it really goes to show the sector is struggling and what the bank thinks it needs to do to drive up demand.’

Other lenders include, Capital Home Loans, which has a 2.2 per cent two-year fix with a huge 7 per cent arrangement fee.

The Mortgage Works has a 2.64 per cent per cent two-year fix with a 3 per cent fee and 3.59 per cent five-year fix with the same fee.