NatWest and HSBC cut mortgage rates again - could we soon see a five-year fix below 5%?
Mortgage deals continue to steadily cheapen, with HSBC, NatWest and Accord kicking off the week by announcing a number of rate cuts. From tomorrow, HSBC will be cutting rates across various deals aimed at first-time buyers, home movers and remortgagers.
Notably, HSBC's cheapest five-year fix, for home buyers with at least a 40 per cent deposit, will fall from 5.25 per cent to 5.16 per cent. The deal includes a £999 fee.
Meanwhile those remortgaing to HSBC with at least 40 per cent of equity in their home, will be able to secure a 5.34 per cent five-year fix, down from 5.44 per cent - again this comes with with a £999 fee.
Similarly, NatWest will cut some of its rates for home movers, first-time buyers and those remortgaging, albeit the majority of its products are seeing little improvement.
For example, its cheapest five-year fix for those buying with at least a 40 per cent deposit is remaining at 5.27 per cent.
Alongside HSBC and NatWest, lender, Accord Mortgages is also cutting all its fixed rates by 0.2bps from tomorrow.
Nicholas Mendes, mortgage technical manager at broker, John Charcol, believes lenders are competing to win business and this is helping drive rates down.
'What a start to the week - HSBC, Accord and now NatWest in the latest attempt to battle for top spot,' says Mendes.
'With new rates from tomorrow, it will be interesting to see if any of today's lenders make another change before the end of the week to stay ahead of the pack.
'We have seen lenders across the market making improvements to their criteria to win over more business.
'High street lenders in particular have been repricing their products in quick succession when they see competitors make changes.'
As of 4 September, five-year fixed rate deals were at an average of 6.19 per cent, according to Moneyfacts. The average two-year fixed rate was 6.7 per cent.
That's down from a peak of 6.86 per cent for two-year fixes at the end of July and 6.37 per cent for five-year fixes.
However, while rates have come down somewhat in recent weeks, they remain up from 5.17 per cent and 5.49 per cent on 1 June. And well up on two years ago, when the average two-year rate was 2.52 per cent and the average five-year rate was 2.75 per cent.
But mortgage holders should expect the downward trend to continue, according to Nicholas Mendes of mortgage broker, John Charcol.
He says: 'Five-year fixed rate will continue to fall as future market expectations improve with each downward inflationary announcement.
'We have seen five-year fixed rate steadily decrease over the last few weeks with this pattern to continue to the end of the year.
'Anything starting with 4 per cent will be good news with hope for low 4 per cent by the end of the year.'
Similarly, Mendes expects two-year fixed rates to fall, albeit he expects borrowers will be paying above 5 per cent until the end of the year.
'Expect the majority of two-year fixed rate to being with a 5 per cent,' adds Mendes, 'hopefully we will see the 5 per cent barrier being broken but at this point can't see that happening.'
For anyone with the dreaded remortgage on the horizon, Mendes suggests planning ahead.
'Speak to a mortgage broker at least seven months before your fixed rate is due to expire.
'Market rates are higher than when you would have likely fixed in the past so you will want to ensure you understand how this could impact your budget.
'You can look to fix into a new deal six months before your rate is due to expire which means in the event rate go up you have secured a favourable deal.
'Also, if the rate goes down you can always switch to the better rate whether this is moving on to the new lender's lower rate, opting to resubmit to a new lender, or stay with your existing lender once you know their rate typically three months prior to your fixed rate ending.'
