New relief for homeowners now that THREE lenders are reducing mortgage interest rates by as much as 0.45%

HOMEOWNERS have been given a new boost as three major lenders prepare to cut mortgage rates.

TSB, Barclays and HSBC will reduce interest rates on home loans by up to 0.45% from tomorrow.

Three major lenders are lowering their mortgage interest rates


Three major lenders are lowering their mortgage interest ratesCredit: Alamy

TSB is reducing rates for two- and five-year starter, mover and two-year refinancing mortgages by up to 0.1%.

Barclays, meanwhile, is cutting rates on a range of products, including five-year fixed deals, by up to 0.45%.

HSBC is also cutting rates on more than 40 home loan products, although it has not said by how much.

The latest cuts come as the Bank of England (BoE) remains steady on its base rate.

Decision-makers at the Bank’s Monetary Policy Committee (MPC) opted last week to keep interest rates at 5.25% – the highest level in 16 years.

Major banks and lenders use the BoE base rate to set the interest rate they offer customers on mortgages, loans and savings.

The BoE also uses the base rate to control inflation, which stood at 3.2% in March.

BoE Governor Andrew Bailey said last week after the MPC announced its decision to keep the base rate the same, there was “encouraging news” on inflation but that “more evidence” was needed for inflation to stay low before it would consider cutting interest rates. .

But the BoE now expects inflation to fall below its 2% target in June and could eventually fall to 1.5% in 2026.

Analysts and investors are now convinced that interest rate cuts could happen as early as June.

Best schemes for starters

Lenders tend to price their mortgage deals ahead of a BoE cut, which could indicate why TSB, HSBC and Barclays are now cutting rates.

Lenders are also trying to put pressure on each other to get as much business as possible before interest rates are lowered.

Stephen Perkins, managing director of Yellow Brick Mortgages, said: ‘Excellent news this morning with rate cuts from both Barclays and HSBC reviving a mortgage market that has languished for too long.

“This could be the spark that ignites another mini-tariff war.”

It comes after NatWest cut mortgage rates in March, ahead of the BoE’s rate cut.

Others, however, raised rates after months of fluctuating swap rates, which underlie fixed-rate mortgages.

Expert response to interest rate cuts by lenders

A NUMBER of mortgage experts have welcomed the news that TSB, HSBC and Barclays will cut rates as a positive sign for the coming months…

Dariusz Karpowicz, director at Albion Financial Advice, said: “Such rate cuts are particularly welcome at a time when the market is under significant pressure, providing some relief for both first-time buyers and those looking to remortgage.

“It’s a hopeful sign that lenders are starting to adapt their offerings in ways that can make homeownership more accessible and affordable.

“If other lenders follow suit, we could see a more competitive mortgage market, benefiting borrowers across the board.”

Craig Fish, director of Lodestone Mortgages & Protection, said: ‘Recently we have seen SWAP rates fall in line with the positive commentary and figures from the Bank of England.

“Even though not all of them are ready to cut rates yet, we finally have a lender that is on the side of the borrowers.

“These cuts from Barclays are good ones, and I now expect more major lenders to follow suit.”

Michael Bennison, partner at Bennison Brown, said: “It’s fantastic to see one of the Big 6 cutting mortgage rates. Hopefully this is the start of the rate cutting season, after which HSBC will also follow suit.

“Andrew Bailey’s recent positive comments after the Bank of England meeting, together with yesterday’s news that inflation has fallen in America, will hopefully bring some spring sunshine to the mortgage market.”

With analysts predicting that the BoE will start cutting rates from next month, other lenders may now be more likely to follow TSB, HSBC and Barclays, compared to earlier this year.

How to get the best deal on your mortgage

Finding the best mortgage deal depends entirely on what’s available at the time, but there are ways to get ahead of the competition.

Usually, the larger the deposit, the lower the interest you can get.

If you take out a new mortgage and your loan-to-value ratio has changed, this could also give you access to better rates than before.

A change in your credit score or an increase in your salary can also help you access better rates.

If you have a fixed rate, you could see higher interest rates at the end of the current term, after the BoE increases rates from 2022 until last year.

And if you’re nearing the end of a fixed deal in the next six months, it’s worth contacting your broker now to lock in a rate.

If they drop between now and the end of your deal, you can always apply for a different rate before taking out a new mortgage.

If you leave a fixed deal early, you’ll typically be charged an exit fee, so you’ll want to avoid these additional fees.

But depending on the cost and how much you can save by switching or staying, it may be worth leaving the deal. Make sure you compare costs first.

To find the best deal, use a mortgage comparison tool to see what’s available.

You can also go to a mortgage broker who can do comparison shopping for you, with most offering free advice to help you secure the best deal.

Some brokers charge for advice, so ask them first.

It may cost a few hundred dollars, but it could save you thousands of dollars in total on your mortgage.

You will also need to consider the costs of the mortgage, although some have no costs at all, or you can add these to the cost of the mortgage.

But keep in mind that this means you will pay interest on it and it will be more expensive in the long run.

You can use a mortgage calculator to see how much you can borrow.

Please note that if you decide to take out a new mortgage with a new lender, you will need to pass affordability checks.

It can also check your credit file to see if you have repaid previous debts.

You may also need to provide documents such as utility bills, proof of benefits, your last three months’ pay slips, passports and bank statements.

It is possible to avoid new affordability checks by taking out a new mortgage with your existing lender, provided you do not want to borrow more or extend your term.

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