Certain five-year fixed-rate mortgage deals are now available at rates beneath 4% as several lenders have announced cuts to their rates.
This comes despite the Bank of England increasing the base rate to 4% last week in what was the tenth rate rise since the start of 2022.
HSBC UK has reduced a five-year fixed-rate mortgage deal for borrowers with a 40% deposit to 3.99% – the first time since September 2022 that a five-year fixed-rate mortgage has been offered by HSBC at a rate below 4%.
The move is part of a wider range of mortgage rate cuts made by HSBC following recent reductions in swap rates, which lenders use to price mortgages.
Many mortgage deals vanished from the market following the mini-budget last September. When mortgages returned, they were priced at significantly higher rates.
In recent weeks there have been signs of the fixed-rate mortgage market settling down. Indeed, according to figures from Moneyfacts.co.uk, the average five-year fixed-rate mortgage on the market at the start of January was 5.63%. By the start of February it had fallen to 5.20%.
Moneyfacts said it has also seen below 4% rates offered on 10-year fixed mortgage deals by Virgin Money and Lloyds Bank.
Nationwide also announced on Tuesday that it was cutting fixed rates across its mortgage range by up to 0.75 percentage points.
“It’s encouraging to see fixed mortgage rates coming down for borrowers looking to secure a new deal,” said a spokeswoman for Moneyfacts. David Hollingworth, associate director at mortgage broker L&C, said:
“The thought of being able to fix at a rate lower than base rate (at 4%) would have sounded like dreamland in recent months.
But, despite base rate continuing its upward trajectory, fixed-rates have been falling and borrowers are now faced with a very different picture.
Although those coming to the end of a fixed-rate taken during the low in rates of recent years will still be faced with higher payments than they have been used to, it’s a far cry from the prospect of rates at 6% or more.”
