Major UK Banks Cut Mortgage Rates to Aid Borrowers Amid Falling Inflation

HSBC, Barclays, and TSB have announced reductions in fixed-rate mortgage offerings, providing relief for borrowers in anticipation of a potential interest rate cut from the Bank of England. Financial experts predict more lenders may follow suit, potentially boosting the housing market despite rates remaining relatively high compared to last year.

UK Banks Announce Mortgage Rate Reductions

Three major UK banks—HSBC, Barclays, and TSB—have announced cuts to their fixed-rate mortgage offerings, providing relief for borrowers in light of falling inflation rates.

HSBC is reducing mortgage rates on over 100 fixed deals, ranging from two to ten-year terms, benefiting homeowners and landlords alike. Barclays will decrease rates on some of its deals by up to 0.45 percentage points, with a notable reduction in the five-year fixed rate for borrowers with a 40% deposit, lowering it from 4.77% to 4.32%. TSB is also lowering rates on select two and five-year deals by up to 0.1 percentage points.

These rate reductions come ahead of a potential interest rate cut from the Bank of England, indicated to possibly occur as soon as June. The Base Rate currently stands at 5.25%.

Financial experts like David Hollingworth, associate director at L&C Mortgages, and Mark Harris, CEO of SPF Private Clients, suggest that more lenders may follow suit, which could further boost the housing market.

Despite these cuts, the average rates for two-year and five-year fixed residential mortgages remain relatively high, at 5.92% and 5.49% respectively, compared to May 2022 when two-year fixed rates averaged 3.03%.