Cuts to mortgage rates by Lloyds Banking Group PLC (LSE:LLOY)’s Halifax and Nationwide Building Society hit the market on Wednesday, alongside a positive set of inflation data.
Announced on Tuesday, cuts by the lenders include interest rate reductions of up to 0.37% on three-year remortgage products at Halifax and 0.20% on Nationwide’s fixed deals.
These follow cuts to mortgage rates by a string of rival lenders, as banks anticipate further reductions in base interest later this year - a narrative supported by inflation data on Wednesday, according to analysts.
Though largely priced in by lenders, according to Hargreaves Lansdown’s Sarah Coles, markets have been left anticipating two Bank of England cuts before the year-end.
This is after ONS data showed consumer prices ticked up slower than expected by 2.2% in July, but key services inflation subsided from 5.7% to 5.2% month on month.
“The outlook for mortgage rates should boost demand in the coming months,” Pantheon Macroeconomics analysts said.
“The typical two-year fixed-rate mortgage interest rate fell to 5.0% in July, and will fall to 4.3% by the end of the year if market pricing for [...] rate cuts is right.”
Highlighting an uptick in house prices in July, Pantheon added: “We think the trend will gain further ground as mortgage rates fall and real incomes rise.”
Persimmon PLC (LSE:PSN), Barratt Developments PLC (LSE:BDEV), Berkeley Group Holdings PLC (LSE:BKG) and Taylor Wimpey PLC (LSE:TW.) were among housebuilders climbing on Wednesday.