Several major mortgage lenders, including Halifax, HSBC, Nationwide, Santander, and TSB, have all announced reductions to their fixed-rate mortgage offerings this week. These rate cuts come as the market looks ahead to the Bank of England’s next decision on interest rates, scheduled for Thursday, 7 August.
There is growing speculation among market experts that the Bank’s Monetary Policy Committee (MPC) may reduce the Bank Rate from its current 4.25% to 4%. Such a move would mark a shift towards easing borrowing costs, though the recent inflation data has made the decision more uncertain.
The inflation rate for the 12 months to June stood at 3.6%, which was slightly higher than analysts had expected. The Bank of England aims to keep inflation at a target rate of 2%, and higher interest rates are one of its primary tools to manage this.
In response to market conditions, Halifax has cut selected fixed-rate mortgage deals for residential remortgages, available through intermediaries. The reductions are up to 0.22 percentage points. For example, two-year fixed deals now start from 3.81% at 60% loan-to-value (LTV) with a £999 fee. Five-year fixed deals begin at 4.01% under similar terms.
Nationwide has also made reductions of up to 0.21 percentage points across its range of fixed-rate products for both new and existing customers. A two-year fixed rate for home movers is available at 3.74% for those with a 40% deposit, with a loan minimum of £300,000 and a £1,499 fee.
Additionally, Nationwide has introduced a two-year remortgage product with a rate of 3.99% and a £999 fee for borrowers holding at least 25% equity in their homes (75% LTV).
Virgin Money, a subsidiary of Nationwide, has opted to increase rates on its fee-free fixed rate deals for purchases with a 5% deposit. The two-year rate has been set at 5.04%, while the five-year deal is now priced at 4.89%.
HSBC is expected to roll out reduced rates for selected residential fixed-rate mortgages starting Tuesday, 5 August. These new deals will be made available via brokers and published online next week.
Santander has reduced fixed rates for new borrowers but has also raised rates on some products for home movers and first-time buyers. The bank’s two-year Homemover deal for new build homes has dropped by 0.06 points to 3.73% at 60% LTV with a £999 fee.
Conversely, Santander increased certain Homemover rates for loans between 85% and 95% LTV by up to 0.11 points. These now start at 4.04% with a £999 fee. Additionally, first-time buyer deals have risen by as much as 0.12 points, with one example being a two-year fixed rate at 4.09% (85% LTV).
TSB has introduced cuts of up to 0.3 percentage points for existing residential and buy-to-let customers. This includes product transfers and additional borrowing options, with two-year fixed product transfer rates starting from 3.74% (60% LTV) and a £1,495 fee.
The Mortgage Works, Nationwide’s buy-to-let arm, has also reduced selected rates by up to 0.25 points. Their two-year fixed deal for standard buy-to-let remortgages now stands at 4.04% with a £1,495 fee (65% LTV), while limited company buy-to-let products are priced from 3.99% with a 3% fee (75% LTV) and include a free valuation.
Katherine Stagg, a broker at Stagg Mortgages, commented on the current state of the market. She noted that fixed rates are edging below 4% for certain borrowers and that this trend is being driven by lender competition and expectations of a potential rate cut.
Stagg added that although the Bank of England held interest rates steady in June, the market is anticipating a 0.25% cut next week. However, the latest rise in inflation could affect the committee’s final decision.
Supporting this view, the Bank of England’s latest Money and Credit report highlighted an uptick in mortgage activity. In June, approvals for home purchase rose by 900 to reach 64,200, and remortgage approvals increased by 200 to 41,800—the highest figure since October 2022.
June also marked the fourth straight month of declining average interest rates on new mortgages, falling from 4.47% in May to 4.34%. This ongoing downward trend is providing some much-needed relief to borrowers amid lingering cost-of-living pressures.
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