Mortgage Rates Cut But Borrowing Pressures Remain
Several lenders are reducing their interest rates on new fixed mortgages on Friday, offering a glimmer of hope to hard-pressed borrowers.
Barclays, HSBC and TSB will cut rates slightly on new deals, but applicants still face much higher costs than many have become accustomed to.
New figures show that more people have been struggling to make repayments. The number of homeowners facing the first stage of the home repossession process has risen.
The effect is also being felt by tenants, charities say, as financially squeezed landlords step up no-fault evictions.
The interest rate on a fixed mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it. Doing nothing would leave people on a variable rate, which is very expensive.
About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.
Lenders have made frequent changes to the interest rates on new deals, as their own funding costs have shifted.
Uncertainty over when, and how often, the Bank of England will cut its benchmark rate has led to numerous changes.
However, expectations have risen of a rate cut by the Bank in June, which may now be reflected in mortgage rates.