Nationwide Building Society, HSBC Holdings PLC (LSE:HSBA) and TSB Banking Group (LSE:TSB) have announced interest rates on their mortgages will fall from tomorrow, as lenders continue to retreat from earlier hikes.
Following June’s lower-than-expected rise in inflation, lenders have increasingly been reducing interest on mortgages in the hope of a lower peak in UK base rates.
As a result, HSBC will cut rates on a range of two, three and five-year fixed rate mortgages from Wednesday, the bank announced on Tuesday, though by how much remains to be seen.
Nationwide will reduce rates on fixed deals by up to 0.55 percentage points on Wednesday meanwhile, with those buying or re-mortgaging on five-year 60% loan-to-value deals able to get interest of 5.64%.
TSB’s cuts will take its cheapest five-year fix even lower than this to 5.44% though, with some reductions set to be by up to 0.4 percentage points.
Having squabbled to lift rates in June in anticipation of the Bank of England’s 50 basis point hike to base interest, lenders are now pricing in a less-harsh peak in rates, analysts say.
Markets are now anticipating UK interest rates will peak at around 6%, according to AJ Bell analyst Laura Suter, having previously feared rates in excess of 7%.
HSBC had moved to cut rates late last month in response, with L&C Mortgages broker David Hollingworth tipping the move should prompt more competitive rates from others.