Mortgages Are About To Get A Well-Earned Summer Break

As predicted here, mortgage rates have started falling. Barclays, HSBC and NatWest have all taken out their shears and cut their prices.

- JAMES MOORE

We are seeing something that has been no more common than an electioneering politician being honest with voters – genuine good news for borrowers.

The downward shift applies to fixed-rate products; the two- or five-year deals, which are the most popular among the UK’s hard-pressed corps of homeowners and prospective homeowners. Those currently remortgaging are still coming off cheap-as-chips deals taken out when base rates were near zero and there was no expectation in the City that this would change. Rates starting with the number two were easy to find at this time.

Things are very different today – and people remortgaging have found themselves hundreds of pounds a month worse off. Firsttime buyers have to contend with high house prices, pricey mortgages and a (relative) lack of availability.

So it’s not exactly fun out there. But, as Tesco likes to say, every little helps. Days after the average first-time buyer’s monthly mortgage repayment exceeded £1,000 for the first time, three of the biggest lenders – HSBC, Barclays and NatWest – have cut their base rates ahead of an anticipated interest rate cut by the Bank of England. Last week, it decided to keep rates at 5.25 per cent – but, as inflation tumbles, it won’t be for much longer.

What’s behind the banks’ sudden conversion to the cause of cutting prices? In short, the interest rate swaps market in the City – which governs the price of fixed-rate deals – has taken a downward turn.