Mortgage lenders cut rates as gilt yields tumble

LEADING lenders scrambled to slash mortgage rates today as gilt yields fell sharply after the US Federal Reserve pencilled in at least three cuts next year.

- Jonathan Prynn

HSBC, Virgin Money and TSB were among big high street names pushing through pre-Christmas reductions in the price of their fixed rate homes loans in a boost for property buyers.

More cuts from lenders are expected over the coming days as the mood in the markets shifted rapidly from fear of a prolonged period of high rates to exuberance in anticipation of sharply falling borrowing costs next year.

The Bank of England was widely expected to leave its benchmark rate unchanged at 5.25% for the third consecutive meeting of the Monetary Policy Committee today.

However, City markets are now pricing in a 50% chance of a first cut by the Bank as soon as March with five quarter point cuts bringing the rate down to 4% - expected by the end of 2024.