Some key lenders have made rate reductions this week, and rates have been on a downward trend over the past few weeks.

Several major lenders have reduced their fixed-rate mortgage deals in the past few days. NatWest was the first to make rate cuts, followed by Barclays.

These moves have been described by industry experts as a sign that rate cuts are happening in small increments.
Barclays cut rates by 0.31%, while HSBC has announced cuts on residential and buy-to-let mortgage loans.

Coventry Building Society has also said it will reduce some of its rates from Thursday, while other lenders, including MPowered Mortgages and Fleet Mortgages, have trimmed rates.

According to the website Moneyfacts, the average five-year fix is currently standing 5.53%. The average two-year fixed rate deal on a 75% Loan-To-Value across the six major lenders (Nationwide, Santander, HSBC, Halifax, Barclays Bank, NatWest, and Lloyds) is 5.14%, according to comparison website Uswitch.

Bank of England’s base rate

Fixed mortgage rates have been increasing in February, but now attention is turning to the Bank of England’s base rate. The base rate is at a 16-year high of 5.25% and has been at this level since last August. The most recent review on 20 June saw the rate remain unchanged despite several predictions of a possible rate cut. So when will it actually go down?

While we can’t say for sure what will happen, financial markets are predicting one or two interest rate cuts by the bank in the Autumn.

Inflation target

Consumer Prices Index or CPI inflation (which relates to household food items like bread and cereal) has now reached the bank’s overall target level of 2%. However, services inflation (relating to services education, culture and hospitality) is still higher than the Bank of England would like it to be. It fell to 5.7% in May, just shy of the 5.5% figure economists had predicted.

The Bank of England will want to ensure we’re out of the woods with the inflation challenges we’ve faced before lowering the rate. Inflation stood at 11.1% in October 2022, the highest level for 40 years.

We will keep you updated on any significant trends and rate changes.

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