Two major high street banks have cut their mortgage rates again, following multiple cuts last week.
NatWest has announced that it will make a range of rate reductions from Tuesday, as will HSBC.
HSBC cut rates on July 1 as part of a raft of lender changes. Halifax, Barclays, Santander, and Nationwide also cut rates on their home loans last week.
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Mortgage experts have said it was rare for a lender to cut rates twice in a week.
Aaron Strutt of brokers Trinity Financial said: “It is not that common for lenders to lower their rates twice in a week, so it shows how keen they are to do business at the moment.
“It seems like the banks and building societies are expecting a reduction in the number of property purchases, which certainly isn’t helped by the current stamp duty levels, although they are expecting more remortgages where borrowers switch to other providers to get a better deal or borrow more cash.”
Swap rates, the rates at which banks lend to one another and a major determinant of mortgage pricing, have fallen in recent weeks, which gives lenders more room to decrease costs for households.
These rates tend to follow long-term predictions for where the Bank of England base rate will go in the future.
The Bank of England Governor, Andrew Bailey, has appeared to confirm more cuts to the base rate were on the way later this year.
In addition to this, brokers say that some reductions in rates from lenders could prompt other providers to drop rates in order to compete for customers.
Nick Mendes of John Charcol brokers said that the cuts were a continuation of a “price war” that seemed to be occurring.
He said he expected to see further repricing from some banks later this week.
“There’s still room for rates to fall further. The key question now is how quickly others follow HSBC’s lead, and how much margin they’re prepared to sacrifice to stay competitive.”
Other experts have stressed that the changes are incremental, rather than dramatic.
Justin Moy, of EHF Mortgages, said: “Many of the improvements are very small, whilst larger cuts are reserved for those lower risk borrowers with the biggest deposits or equity.”
Andrew Bailey, the Governor of the Bank, said when speaking to CNBC last Tuesday: “I think that the path of interest rates will continue to be gradually downwards. I haven’t changed my mind on that.”
While Mr Bailey stopped short of confirming a cut in August, his remarks have been interpreted by economists as a strong indication that a reduction is likely.
Interest rates currently sit at 4.25 per cent, but markets are increasingly pricing in the likelihood of two quarter-point cuts by the end of the year.
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