12 June: Market Divides Over Likelihood Of Bank Rate Reduction
Santander has cut selected fixed rates for residential purchase and remortgage, in welcome news for borrowers looking for a new home loan.
The bank, the fourth largest mortgage lender, has cut its five-year fixed rate with a £999 fee for home purchase from 4.38% to 4.28%, for buyers with at least a 40% cash deposit (60% loan to value).
Its two-year fixed rate for purchase with a £999 fee has been cut from 5.18% to 5.11% (85% LTV).
The bank’s purchase deals for new build properties have also been reduced. For example, it is now offering a deal at 95% loan to value at 5.87%. The deal has no fee and pays £250 cashback on completion.
In addition, the 95% LTV three-year new build fixed rate with no product fee and £250 cashback is 5.87%, down from 6.01%.
The rate cuts come as other lenders have been increasing their fixed rates (see stories below). This is because the market increasingly feels the Bank of England won’t cut interest rates when its Monetary Policy Committee (MPC) meets on 20 June.
Previously, experts had believed rates might be cut. But it now appears rates could be higher for longer, with the market suggesting the rate cut might come at the next MPC meeting in August.
Bank of England mortgage lending statistics for the first quarter of 2024, published today (12 June), show potentially growing confidence in the housing market. The value of new mortgage commitments (lending agreed to be advanced in the coming months) increased by 30.8% from the previous quarter (Q4 2023) to £60.1 billion. This was also 31.2% greater than a year earlier.
However, the data also shows the amount of mortgage arrears is growing, as higher rates continue to bite. While the number of new arrears cases fell by 11.4% in the first three months of the year, the value of total outstanding mortgage balances with arrears increased by 4.2% on the previous quarter to £21.3 billion – 44.5% higher than the same period a year ago, when they were under £15 billion.
The Bank of England Monetary Policy Committee is next due to meet on 20 June. Bank Rate is currently 5.25%.
11 June: Attention Switches To August Bank Of England Decision
Barclays has increased the cost of selected fixed rate deals by up to 0.2 percentage points across its residential purchase and remortgage ranges, as lenders continue to adjust their rates to reflect changing sentiment in the market.
Halifax has also announced it will tweak first-time buyer and home mover rates upwards by 0.05 percentage points on selected two and five-year fixed rates from Thursday (13 June). The increases will be applied across standard deals as well as the bank’s Green mortgages, shared equity and shared ownership deals, new build and large loan deals.
New rates and deals will be live on the bank’s website on Thursday.
Lenders are increasing rates following increases in swap rates, the fixed interest rates banks use to lend to each other in the wholesale market which dictate the mortgage rates that are offered to customers.
Rates have edged up as the market now believes the Bank of England won’t cut interest rates until its August Monetary Policy Committee meeting at the earliest. Previously it had been hoped a rate cut could come at the next meeting on 20 June.
Among Barclays rate lifts is its five-year fixed rate deal for remortgage at 75% loan to value (for those with at least 25% equity in their property) which has gone up from 4.45% to 4.65%. The deal has a £999 fee.
The bank’s two-year fixed rate for purchase at 85% loan to value has risen from 5.18% to 5.28%. There is no fee on this deal.
But while a range of deals will see a rate rise from tomorrow, Barclays has also cut the rates on two of its five-year fixed rate purchase deals at 85% loan to value. The deal with a £999 product fee falls from 4.78% to 4.73%, while the fee-free equivalent deal has been cut from 4.95% to 4.9%.
NatWest has also cut selected fixed rate deals for buy-to-let (BTL) purchase and remortgage by up to 0.2 percentage points, while increasing other fixed BTL rates, in a mixed move similar to that of Barclays. The bank’s rate changes include cuts and increases to Green BTL mortgage deals.
NatWest has dropped the rate on its two-year fee-free fixed rate for remortgage at 60% loan to value from 5.38% to 5.28%. Elsewhere, its five-year fixed rate for home purchase at 60% LTV has been pushed up from 4.43% to 4.63%. This deal has a £995 fee.
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
