The Daily Observer London Desk: Reporter- Victoria Smith
Three more major mortgage lenders have announced they are slashing their rates.
NatWest, Halifax and Virgin Money will all be making cuts, effective from 2 August.
Most notably, those buying or remortgaging with NatWest will see two-year and five-year mortgage rates slashed by up to 30 percentage points on certain products.
Reductions will be made on mortgages for both new and existing customers.
At present, NatWest’s cheapest five-year fixed rate charges 5.84 per cent. This is available to those remortgaging with at least 40 per cent equity in their home.
NatWest has not said exactly which mortgage rates will be reduced, but after tomorrow’s change, this is likely to fall to either 5.64 per cent or 5.54 per cent.
Virgin Money also announced it is cutting the costs on some of its deals offered via mortgage brokers by up to 0.41 percentage points.
Meanwhile, Halifax is slashing the rate on its five-year fixed-rate remortgage products by 0.18 percentage points.
It follows a swathe of rates cuts announced by rival lenders last week.
First, HSBC cut rates for new customers and those remortgaging, with deposits or equity of at least 10 per cent. This was quickly followed by Barclays, Nationwide and TSB.
Coventry Building Society also reduced its mortgage rates, cutting all its two and five-year fixed new home loan rates. Other lenders to follow suit included Accord Mortgages, MPowered and Platform, part of the Co-operative Bank.
Despite the recent flurry of activity from lenders, average mortgage rates have remained steady over the past week, according to data.
Since the start of last week, the average two-year fixed rate mortgage has fallen from 6.83 per cent to 6.81 per cent, while the average five-year fix is unchanged at 6.34 per cent.
Despite lenders reducing rates the average fixed rates in the market have remained steady
However, there are many who believe more lenders will slash rates over the coming weeks.
This is mainly because CPI inflation fell by more than was expected last month, causing market expectations surrounding interest rates to change.
Forecasts for the Bank of England base rate peak have now fallen from 6.5 per cent to less than 6 per cent, with some now forecasting that the base rate may peak at 5.5 per cent.
Swap rates, which banks and building societies use to price their fixed mortgages, have also fallen.
Nicholas Mendes, mortgage technical manager at broker John Charcol, says: ‘In another win for mortgage holders, NatWest are the latest high street lender to reduce their fixed rates.
‘HSBC made reductions last week, swap rates have remain steady and lower in recent weeks compared to the volatility a few months ago and current fixed rate repricing shows there is plenty of movement for lenders to reprice downwards.
‘Typically lenders would hold back from making any rate changes before a base rate decision so imminent, markets have felt confident in the last few weeks which hopefully look to finally be rubbing off on lenders.’
While NatWest is slashing the rate on its residential products, it is hiking the rates on its buy-to-let deals.
Those using NatWest to purchase a buy-to-let will see a rate increase of up to 10bps on selected five year deals while buy-to-let remortgage rates are set to rise by up to 30bps and 25bps on selected two and five year deals.
