Lenders announce further mortgage rates cuts


The latest reductions come after comments by BoE governor Andrew Bailey last week indicated that the UK could avoid further rate hikes

Lenders announced further cuts in UK mortgage rates yesterday, with more reductions set to follow, as new data discloses the number of mortgage options for borrowers has grown to its highest level since February 2022.

The latest reductions come after comments by BoE governor Andrew Bailey last week indicated that the UK could avoid further rate hikes.

There has been a bit of a shift in markets over the last week or so, said Aneisha Beveridge, head of research at estate agency Hamptons. Since Andrew Bailey commented, swap rates (used by banks price mortgage deals) are lower a bit.

Last week, Bailey told MPs that interest rates, which presently sit at 5.25 per cent after 14 successive hikes, were “much closer” to the top of the cycle.

The BoE is expected to raise base rates by another quarter point next week but investors are split on whether there will be one more rate hike before the end of the year.

Rightmove’s mortgage commentator Matt Smith said: There is a broadly held view that the Base Rate is now approaching its peak which led to a drop in swap rates declining towards the end of last week, and this could mean we see lenders make more important mortgage rate reductions in the next few weeks. Swap rates have also reacted fairly positively to today’s unemployment figures and pay growth data.

All eyes will now look to the approaching inflation data, which are likely to have an effect on the next BoE Base Rate decision. As long as the news is in line with market expectations, it is possible that rate reductions will begin to gather pace, and we could see sub-5 per cent rates return to the market for the first time since the end of June, he added.

The average price of a two-year fixed mortgage yesterday was 6.66 per cent, as per Moneyfacts, down from 6.85 per cent at the beginning of August, which was the highest level since 2008.

But average borrowing rates stay above the levels they reached immediately after last year’s “mini” Budget.

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