Mortgage rates fall: Major lenders including HSBC and Virgin cut interest

Major lenders are starting to cut mortgage rates, after the mini-budget pushed them up and added hundreds of pounds to some homeowners’ bills.

HSBC is set to cut rates on five-year fixed mortgages for those with deposits of 25 percent or more by as much as 0.11 percentage point in the coming days.

It means the lowest rate on such a mortgage with the lender will be 5.37 percent, down from 5.48 percent previously.

Rising Interest – Homeowners remortgaging or buying a new property have seen interest rates rise in recent weeks due to economic instability

Virgin Money is also cutting rates from today, with the cheapest now being 5.49 per cent.

This is based on a five-year flat rate for someone with a 25 per cent deposit, paying a fee of £1,295.

Clydesdale Bank, also owned by Virgin, is lowering its rates for existing customers with remortgage deposits of 35 percent or more by 0.1 percentage point, with the cheapest now being 5.54 percent on a fixed five-year deal. years below 5.64 percent.

The bank also reduced a two-year fixed product to 65 percent loan-to-value from 6.00 percent to 5.90 percent for existing customers.

Accord Mortgages has announced that it will lower several of its rates tomorrow (October 26), including on low-deposit products aimed at first-time buyers.

In an email to brokers, the lender confirmed that it was cutting 5 percent deposit product fees by as much as 0.52 percent, and 10 percent deposit product fees by as much as 0.53 percent.

The slightly higher deposit products of 15 percent and 25 percent will be reduced by as much as 0.35 percent.

The lender also said it would launch a ten-year term product tomorrow.

Coventry Building Society will also reduce its mortgage rates, although it is unclear by what margin.

David Hollingworth, mortgage expert at broker L&C, said: ‘This could be the first sign that more stable market conditions will give lenders the opportunity to cut rates where they can.

“It will take some time to feed though, as many are still dealing with a huge spike in demand after the mini-budget.”

Mortgage rates hit a 14-year high last week after former foreign minister Kwasi Kwarteng’s tax cut mini-budget in late September rocked financial markets.

Increase in interest: The price of fixed-rate operations has continued to rise since the end of last year, but it has accelerated since the government's mini-budget

Increase in interest: The price of fixed-rate operations has risen since the end of last year, but it accelerated after the government’s mini-budget

Two- and five-year average fixed rate hit 6.65 percent and 6.51 respectively.

It follows the appointment of Rishi Sunak as prime minister, which housing experts have welcomed, saying it could cut the government’s borrowing costs and restore some stability to the mortgage market.

Lawrence Bowles, director of research at estate agency Savills, said: ‘The uncertainty of recent months has had a material impact on gilt rates – the rate at which the UK government can borrow.

‘In turn, this affects the cost of borrowing for the rest of us. It affects mortgage rates for homebuyers, development debt costs for homebuilders, and refinancing costs for real estate investors.

“Anything that helps restore certainty and confidence to the market is likely to reduce borrowing costs.

“That, in turn, will reduce affordability pressure for households that obtain mortgage financing.”

However, experts say mortgage rates are unlikely to return to the historically low levels homeowners have enjoyed in recent years.

Tom Bill, head of UK residential research at Knight Frank, said: “Mortgage rates may be down compared to the period after last month’s mini-budget, but a 12-year period of ultra-low borrowing costs is over.” .

“As demand wanes, 18 months of double-digit home price growth will also come to an end.”

A year ago, mortgage rates were at near record lows, with the housing market booming, banks willing to lend and borrowing costs low as the Bank of England base rate was at a record low. of 0.1 percent.

Since then, it has gradually raised the rate to 2.25 percent, driving up mortgage costs, though the mini-budget hastened this.

It means that homebuyers and borrowers who fixed their mortgage for two years in 2021 may see the biggest increases in their monthly payments when they reach the end of their arrangements and need to remortgage.

The cheapest rate available on October 18, 2021, for example, was just 0.98%.

Many will cross their fingers that rates start to drop in 2023, before they have to refinance.

On the Rise: A year ago, mortgage rates were at near record lows, but that has now changed

On the Rise: A year ago, mortgage rates were at near record lows, but that has now changed

The Bank’s Monetary Policy Committee will meet again on November 3 and is expected to raise the base rate by 0.75 percent, the biggest increase yet.

Experts say this could result in lenders continuing to lower their fixed rates but raising variable ones.

Ray Boulger, senior technical manager for mortgages at broker John Charcol, said:

‘I expect that over the next few weeks other lenders will reduce fixed rate costs and increase product variety. However, most variable rates will increase after the MPC meeting in the next few weeks, when the bank rate is expected to rise between 0.75 and 1 percent.

‘The combination of lower fixed rates and rising variable rates will reduce the current large gap between the two.

“The market has reacted very positively to the confirmation over the weekend of Boris’ withdrawal and Rishi’s appointment as prime minister, with gilt yields and swap rates falling significantly, allowing lenders to cut rates beyond the modest cuts just announced by HSBC and Coventry.’

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate agreement is coming to an end, or because they have agreed to purchase a home, have been urged to act but not panic..

Banks and building societies continue to lend and mortgages are still being offered and applications accepted.

However, rates are changing rapidly and there is no guarantee that the deals will last and not be replaced by mortgages that charge higher rates.

This is the best Money Mortgage Rate Calculator powered by L&C that can show you offers that match the value of your mortgage and property

What if I need to re-mortgage?

Borrowers should shop around and talk to a mortgage broker and be prepared to act to secure a rate.

Anyone with a fixed-rate agreement ending within the next six to nine months should consider how much it would cost to remortgage now and consider closing a new agreement.

Most mortgage deals allow fees to be added to the loan and are then only charged when you withdraw. By doing this, borrowers can lock in a rate without paying expensive setup fees.

What if I am buying a house?

Those with agreed home purchases should also aim to lock in rates as soon as possible, so they know exactly what their monthly payments will be.

Homebuyers should be careful not to overstretch themselves and be prepared for the possibility of house prices falling from their current high levels, due to higher mortgage rates limiting people’s borrowing capacity.

How to Compare Mortgage Costs

The best way to compare mortgage costs and find the deal that’s right for you is to talk to a good broker.

You can use our best mortgage rate calculator to display offers that match your home value, mortgage size, term, and fixed rate needs.

Keep in mind, however, that rates can change quickly, so the advice is if you need a mortgage, compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you. .

> Consult the best fixed-rate mortgages that you could apply for

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