Several major banks have recently reduced their mortgage rates following a period of increasing costs attributed to the recent conflict in Iran. HSBC is scheduled to implement rate cuts across its residential and buy-to-let mortgage offerings, with the specifics set to be revealed upon activation. TSB is also lowering rates, particularly on its two-year fixed house purchase mortgages, which will see a decrease of up to 0.45 percentage points. However, certain other TSB mortgage rates will see an increase, including those for product transfer deals and additional borrowing.
Halifax has announced plans to reduce fixed rates on home mover and first-time buyer mortgages by up to 0.35% starting Friday. Santander, on the other hand, has already slashed some mortgage products by up to 0.28 percentage points, making it the first major lender to do so since the onset of the Middle East conflict.
The decision to lower borrowing costs was driven by a decrease in swap rates, which lenders use to determine loan pricing. According to the latest figures from Moneyfacts, the average two-year fixed mortgage rate on Thursday morning was 5.88%, slightly down from the previous day, while the average five-year fix remained unchanged.
Market concerns over potential inflation spikes due to the Iran conflict have led to a rise in mortgage rates, with expectations of the Bank of England maintaining high interest rates for an extended period. Moneyfacts reported 6,665 homeowner mortgage products available on Thursday, indicating that rates may have stabilized. Adam French, head of consumer finance at Moneyfacts, noted that average mortgage rates have remained steady post-Easter, suggesting a possible plateau in the rise. While product availability has been gradually improving, the number of deals is still lower than pre-conflict levels.
Despite recent rate cuts by some lenders, the mortgage market remains vulnerable to sudden changes as pricing is influenced more by expectations than current rates. Ongoing uncertainties in the Middle East and the potential impact of economic policies under the Trump administration continue to pose risks to the trajectory of borrowing costs.
