Mortgage News August 2023
Harlow residents: This is what has happened with mortgages this week..
Reductions by Nationwide, HSBC, TSB and Halifax come as competition in home loan market intensifies.
Four large UK lenders are cutting mortgage rates for the second time in three weeks. Competition in the home loan market intensifies on the back of better than expected inflation data https://www.ft.com/
Who has done what..
On Wednesday 9th August, Nationwide reduced prices on some fixed products by up to 0.55 percentage points.
HSBC trimmed costs by as much 0.2 percentage points.
TSB lowered rates by up to 0.4 percentage points.
Halifax, part of Lloyds Banking Group — the largest mortgage provider in the UK — is also cutting prices on fixed mortgages by as much as 0.71%.
Why?
The reductions from the four big providers will further bolster hopes that mortgage rates have peaked. The cost of a two-year fixed mortgage has fallen a few basis points from the 15-year high it reached at the start of August.
The latest moves mark the third week of mortgage rate falls.
This is after data last month showed UK inflation fell to a 15-month low in June.
This is reversing a sharp increase earlier in the year driven by concerns about persistent price pressures.
Mortgage rates have continued to fall despite the Bank of England lifting interest rates to a 15-year high of 5.25 per cent last week.
This is because providers base costs on the swaps market, which reflects predictions of the future level of BoE rates.
The level at which borrowing costs are expected to peak early next year fell slightly following the BoE decision. Lenders have also had to cut rates to compete as the market has slowed, with borrowers adjusting their spending in response to the challenging economic environment.
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“Higher rates means fewer mortgages for banks and building societies,” said Aaron Strutt, director at broker Trinity Financial. “The people we deal with on a day-to-day basis would rather rates were lower so they could do a bit more business.” Smaller lenders Market Harborough Building Society and MPowered mortgages also said this week that they were cutting costs.
A word of caution
Brokers have also cautioned that major reductions in mortgage costs are unlikely in the short term, with inflation still high despite the promising data for June and the BoE expecting rates to remain higher for longer. David Hollingworth, director at London & Country Mortgages, said providers would have to “see what next year brings”, adding: “The bottom line for borrowers is they should expect that rates are not going to return to the ultra-low levels they’ve enjoyed over the last 10 to 15 years.”