The country’s largest building society cut 0.15 percentage points off many of its fixed-rate mortgage products, while also introducing reductions for some of its tracker range too.
Ashley Thomas, director of City-based mortgage broker Magni Finance, noted that while the cut was not large, it is the latest in a wave of reductions, which all of the top lenders cutting rates at least three times in the last six weeks.
“There seem to be a lot of lenders reducing their rates at present,” Thomas said. “I expect this trend to continue and most will be hoping it is the start of a price war. The next set of inflation data will be a big factor in whether rates will continue to go down.”
It comes as Bank of England chief economist Huw Pill this morning provided insight into where the Bank of England’s interest rates might go next at a conference in South Africa. He said he favoured a “table mountain” outlook, where rates might not spike to an especially high level, but stay elevated for a long time.
This, he said, “imposes fewer risks to financial stability”, as many experts have warned the bank’s rate rises are likely to tip the UK into a recession this year or next.
That led City traders to bet that the Bank rate will not peak at 6%, as they had previously expected, and instead to price in a peak of 5.75%. Markets still strongly expect the Bank to raise rates when it next meets on 21 September, but having once seen a rise as certain it now believes there is around a one-in-four chance of a pause.
According to Moneyfacts, the average five-year fixed residential mortgage rate today is 6.20%, down from an average rate of 6.21% yesterday.