Barclays, Halifax, HSBC and NatWest are among the lenders now offering five-year fixed-rate mortgages of under 4%, below the Bank of England’s 5% key rate
Britain’s biggest high street lenders are continuing to cut borrowing costs after the Bank of England’s first interest rate cut in four years triggered a boom in homebuyer activity.
Barclays, Halifax, HSBC and NatWest are among the lenders now offering five-year fixed-rate mortgages of below 4%, below the Bank of England’s 5% key rate.
The best five-year fixed rate is currently 3.83% for buyers with a 40% deposit, as per a new report from property portal Rightmove. This marks the lowest level for such a product since before the U.K.’s mini-budget in September 2022.
It follows a prior easing of tracker rates, which declined in line with the bank’s 25 bp rate cut earlier this month.
The improving economic environment, as well as the political certainty gained from the U.K.’s July general election, has led to an “immediate upturn,” in buyer activity, Rightmove found.
The number of house hunters contacting estate agents for viewings is up 19% versus a year ago following the Bank of England’s August 1 decision, the property portal said in its report, adding that this is a marked increase from the 11% annual rise logged in July.
The number of new sellers coming to market also increased 5% this month compared with the previous year. The number of sales being agreed, meanwhile, is 16% ahead of the near-peak mortgage rate period of a year ago.
Tim Bannister, Rightmove’s director of property science, said that, while minimal, the rate cut had brought some relief to struggling homebuyers, adding that he expects activity to rise further through the autumn.
While mortgage rates are not yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment, he stated in the report.
Rightmove now expects new seller asking prices to increase slightly by 1% in 2024, an upward revision from its earlier prediction of a 1% decline in prices.
The Bank of England is scheduled to meet on September 19 to make a new interest rate decision. Markets are currently pricing in almost a 37% probability of a September rate cut, with expectations rising to 74% for November, according to LSEG data.
