Big UK Lenders Cut Fixed Mortgage Deals In Sign Rates May Be Close To Peaking
Several big lenders including Nationwide, HSBC, and TSB have cut rates on their fixed mortgage deals in a sign that home loan costs may be close to peaking after surging to nearly 7%.
The reductions follow data last week that showed inflation fell further than expected in June, helping to calm financial markets and trim expectations of the number of interest rate rises still required to tame inflation.
Next week, the Bank of England is expected to raise rates for a 14th successive time by a quarter point to 5.25% and investors now think rates will peak at 5.75% next March. Previously it was thought UK interest rates could rise to as high as 6.5%. This would have pushed up even further home loan rates for Britons, many of whom are coming off deals priced at below 2%.
Increased housing costs put further pressure on Britons already struggling to cope with higher food and energy bills. An official poll published on Friday showed 45% of people paying rent or a mortgage had seen the cost rise in the past six months. The July poll by the Office for National Statistics also revealed 40% were finding it hard to make these payments. This compares with 31% a year ago.
After rising relentlessly from less than 6% in the middle of June, the average two-year fixed-rate mortgage hit 6.86% on Wednesday, according to the data firm Moneyfacts. On Thursday, it had inched down to 6.83%, and on Friday was lower again at 6.81%.
This gear change was reflected in improved deals from big names including Barclays, TSB, HSBC, and Nationwide, which all cut their rates in recent days, with analysts anticipating average rates will continue to fall.