Barclays PLC (LSE:BARC), TSB Banking Group (LSE:TSB) and Nationwide Building Society were among lenders to announce cuts to mortgage rates on Thursday as speculation builds of slowing base interest hikes.
TSB will cut interest on some two-year fixes by up to 0.55% on Friday, offering prospective and returning buyers rates of 6.04%.
Barclays will offer the same deal with interest of 6.13% meanwhile, cutting rates by 0.15%.
A lower-than-expected rise in inflation in the year to June has prompted hopes that the Bank of England’s next rate call on Thursday, August 3 will be less severe than last month’s rise.
This has left lenders readjusting rates to match market expectations, with many having moved quickly to charge extra on mortgage deals as the central bank lifted base rates by 50 basis points to 5% last month.
“The market is now expecting interest rates to top out at 5.75% or 6% by the end of the year,” AJ Bell analyst Laith Khalaf tipped.
“[It] has already pared back its bets from the height of inflationary panic when rates north of 6% were envisaged,” he added.
As a result, the average two-year fixed mortgage rate across the UK slipped from 6.86% to 6.83% between Wednesday and Thursday, according to Moneyfacts.
Dubbing the news as “a turning point,” Knight Frank Finance mortgage broker Simon Gammon said rates should continue to fall “provided inflation keeps going the right way”.