hings are “getting better and better” for mortgage holders after months of bad news, as Natwest has become the latest lender to cut its rates.
Natwest follows Halifax, HSBC, Nationwide and TSB, among others, in bringing its rates back down after a wave of increases.
Rates had surged from late-June until late-July on the back of repeated disappointing inflation data, which led to fears that the Bank of England could raise interest rates as high as 6.75%. At one point, the average interest rate on a two-year fixed-rate mortgage hit 6.86%, the highest level since 2008, according to Moneyfacts.
But promising news on June inflation, which fell to 7.9%, has sparked a race back down for lenders. HSBC was the first to lower its rates, and has since been joined by all other major banks and building societies, with some decreasing their rates more than once.
Mortgage rates are still well above where they had been for most of the past 15 years, however.
Natwest cut its rates for two-year deals by as much as 0.37 percentage points for new purchases and 0.45 percentage points for remortgages. For five-year deals, the rate cuts were as large as 0.65 percentage points.
Riz Malik, founder of broker R3 Mortgages, said: “This week is getting better and better. With NatWest now joining the ranks of Halifax and HSBC, those lagging behind will likely reconsider their offerings. This is great news for those currently seeking mortgage financing.
“August is certainly turning out to be the best month for the mortgage market yet.”
Kylie-Ann Gatecliffe, director at KAG Financial, said there were signs now of a price war as lenders try to attract prospective buyers.
“The competition is on. It is great to see high street lenders reducing rates, and a rate war is welcomed by us brokers wanting to offer borrowers more appealing products,” she said. “I suspect others will follow suit and we will hopefully see the lenders yet to reduce also start to reprice.”