Three major banks have raced to cut interest rates as traders bet that an expected interest rate hike this week will be the last.
HSBC, Virgin Money and Yorkshire building society have all cut selected fixed rates across their respective home loan ranges, effective today, according to Forbes.
Yorkshire Building Society has reduced selected rates, including a cut of 0.46 percentage points on its 95% loan to value deal for first-time buyers. The rate is now 6.19% with a £1,495 fee.
The mutual has also laid down the gauntlet to other lenders offering a five-year fixed rate at under 5%. The 4.99% deals with a £1,495 fee is available for both house purchase and remortgage and requires a 25% deposit or equity (75% LTV max).
Yorkshire follows The Mortgage Works, the specialist buy-to-let lender owned by Nationwide Building Society, in bringing down five-year fixed rates under 5%.
HSBC has reduced the rate on its 95% loan to value (LTV) first-time buyer mortgage to 5.89%, while Virgin Money has cut fixed rates for home purchase, available through brokers, by up to 0.12 percentage points. It is offering a two-year fixed rate (65% LTV) at 5.6% with a £1,295 fee.
Higher interest rates already mean that millions of homeowners are facing steep rises in monthly repayments and business surveys suggest they could be pushing the UK towards recession.
Optimistic brokers now expect further rate cuts across the market, despite a potential increase to the Bank of England Bank Rate on Thursday this week.
Nick Mendes, mortgage technical manager at online broker John Charcol, says: “These rate reductions follow days of repricing by competitors. HSBC has cut rates twice in as many weeks, for example, proof that competition is hotting up.
“Given the current situation, we can expect high street lenders to make further reductions over the next few weeks as they jostle for new business.”