Some mortgage lenders have been cutting rates after a turbulent month for the market
NatWest has become the latest mortgage lender to announce that it will cut rates, with the prices on its home loans reducing from Friday.
The high-street bank is making cuts of up to 0.39 percentage points across its two-year and five-year mortgages for both buyers and existing homeowners.
It follows other lenders, including HSBC, that have cuts rates in the past week after a turbulent month for borrowers, with prices increasing across the board.
Mortgage brokers have said the cuts are “fantastic news” but have warned households to temper their expectations around future cuts to rates.
Nick Mendes, of John Charcol brokers, said: “The recent rate cuts by NatWest are fantastic news for borrowers, and the moves by HSBC reflect a broader trend among lenders capitalising on a period of stability in swap rates after a month of volatility.
“This volatility was driven by market adjustments to future base rate expectations, influenced by inflationary pressures highlighted in the Budget.
“That said, it’s important to manage expectations. These cuts only scratch the surface following the increases seen in recent weeks, and borrowers will need to be patient before rates return to the lower levels, we witnessed earlier this year.”
Earlier this autumn, most mortgage lenders were offering rates below 4 per cent for those with the largest deposits, but this is no longer the case.
Even with NatWest’s latest cuts, its cheapest deal will be a five-year fixed mortgage for those buying with a deposit of 40 per cent, and this will come at a rate of 4.15 per cent, down from 4.29 per cent currently.
Mortgage rates started to climb after the Budget following an increase to swap rates, which are based on expectations for where the Bank of England base rate will go in the future.
Economists said October’s Budget was likely to mean a higher peak for inflation, and this meant that markets began to predict that the Bank of England would cut interest rates more slowly than previously predicted.
Swap rates rose based on these predictions, and these tend to have a large impact on fixed mortgage pricing.
But as swap rates have eased, some lenders have begun to cut rates, including HSBC this week, and Barclays last week.
Prior to Barclays’ cut, the last mortgage rate cut from one of the so-called big six lenders was by HSBC in early October.