MORTGAGE lenders have begun slashing their interest rates after the Bank of England cut its base rate today.
More than a million homeowners on certain types of mortgages will see a decrease in their monthly payments following the decision.
Barclays, Nationwide and Lloyds have all confirmed their customers on standard variable rate (SVR) and tracker mortgages will benefit within days.
The Bank of England reduced its base rate from 4.5% to 4.25% today in a widely expected move.
The base rate influences interest rates that lenders offer on savings and borrowing, including mortgages.
This is the fourth interest rate cut since 2020, and a further three rate cuts are expected over the next year.
The Bank last cut rates back in February, before holding them steady in March.
This latest cut should bring relief to the millions on SVR and tracker mortgages as these track the base rate.
But those hoping to take out a fixed-rate mortgage are unlikely to see too many further interest rate cuts.
That’s because markets had already priced in today’s expected base rate cut, so some lenders have already reduced their fixed mortgage rates.
In fact, many have been engaging in a price war with some offering rates below 4%.
What are the different types of mortgages and how will they be affected?
Those on tracker and standard variable rate (SVR) mortgages typically see an immediate change in payments.
Tracker mortgages usually involve paying the base rate plus an additional percentage in interest each month.
A standard variable rate mortgage is what you revert to once any initial mortgage term ends.
This rate will change in line with the base rate and is usually higher than any initial introductory rate.
Meanwhile fixed-rate mortgages have a set interest rate for an agreed period of time – often two or five years.
That means if you’re on a fixed-rate mortgage, your interest rate won’t fluctuate with the base rate until your agreed mortgage term ends.
The vast majority of homeowners – more than 7.1million people – are on fixed-term mortgages.
Roughly 629,000 people are on tracker mortgages and 693,000 on SVRs.
The average homeowner on a tracker mortgage will see their monthly repayments fall by nearly £29, according to UK Finance.
This could add up to a saving of nearly £350 over the course of a year.
Those on a standard variable rate (SVR) mortgage could see their monthly payments fall by £13.87, assuming that their lender passes on the base rate cut in full, which could add up to a saving of nearly £170 over a year.
Several lenders have confirmed to The Sun that they will be cutting rates on their SVR and tracker mortgages following today’s base rate decision.
Even if your lender has announced rate cuts, the timing of when your repayments decrease depends on your payment schedule.
We’ve listed all the lenders cutting mortgage rates below.
Barclays
The major bank has confirmed all its mortgage products that track the base rate will decrease by 0.25%.
Existing customers will see their rates change from June 1.
New customers will have access to the new lower rates from May 9.
Barclays’ standard variable rate mortgage is 3.49% above the base rate.
It currently stands at 7.99%, but following today’s announcement it will drop to 7.74% on June 1.
That means if you have a £250,000 mortgage over a 25-year term, your monthly payments would drop from £1,928 a month to £1,887.
This equates to £41 a month, or £492 over the year.
Nationwide
Nationwide customers will also see interest rate reductions of 0.25%.
Those on standard variable rate mortgages will start getting their new rate on June 1.
It will drop from 7.24% to 6.99%.
Tracker mortgages will also reduce on June 1.
Interestingly, Nationwide is also reducing the rates on some of its fixed-term mortgages.
The lowest remortgage rate now stands at 3.84% and is available on both the two and five-year fixed rate products at 60% Loan-to-Value (LTV) with a £1,499 fee.
Switcher rates for existing customers also start from 3.84%, but with a lower £999 fee.
These will be available from May 9.
Lloyds
Homeowners with Lloyds will also see changes to their mortgage payments on June 1.
The Lloyds Bank Homeowner Variable Rate currently sits at 7.99% but will reduce to 7.74%.
The Lloyds Standard Variable Rate, currently at 6.5%, will decrease to 6.25%.
The bank said it will be contacting all customers who will see a change to their monthly mortgage payment to let them know what it means for them.
It added: “We recently reduced selected fixed rate mortgages and continue to monitor the market to ensure our rates are competitive.”
Halifax
Halifax, which is part of Lloyds Banking Group, will also decrease its interest rates from June 1.
The Halifax Homeowner Variable Rate will reduce from 7.99% to 7.74%.
Its standard variable rate will also drop from 7.99% to 7.74%.
HSBC
The bank has also confirmed its tracker mortgage rates will reduce from tomorrow.
They will reduce by 0.25% in line with the base rate.
However HSBC said its standard variable rate mortgage remains “under review” and it will “communicate with customers in due course if changes are made”.
The rate currently sits at 6.74%, after it was slashed from 6.99% in March.
Virgin Money
The rate currently is 7.49% so it will reduce to 7.24%.
However customers will have to wait a little longer for their mortgage payments to fall, as the new rates will be effective from July 1.
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
