Lenders continued to announce cuts to their mortgage rates today, even as higher inflation means the Bank of England is less likely to cut its base rate soon, with Santander and Coventry Building Society among those reducing prices today.
Santander, one of the “big six” high street lenders, announced fixed rate reductions of up to 0.45%, coming into effect tomorrow. However, it also withdrew certain first-time buyer exclusive rates.
Elsewhere, Skipton and Coventry building societies cut rates as well.
Lenders started the year with a flurry of price cuts, amid renewed hopes that the Bank of England would soon reduce its own interest rates. Those hopes appear to have been dampened today, as inflation surprisingly rose back to 4%, still some way from the Bank’s 2% target.
That led to higher prices for interest rate swaps and gilt yields, which are usually used to price mortgages.
Yet this did not appear to deter Santander, Coventry and Skipton.
Aaron Strutt, product and communications director at Trinity Financial, said: “Lenders do not seem to be bothered about the inflation figures at the moment. There have been a huge amount of rate changes over the past few days, not just from the big lenders but also the smaller banks and building societies.
“Every time we think rates are likely to stabilise and will not come down any more, we get another email to say prices are getting better. The rate changes just keep coming, and they are unlikely to stop anytime soon.”
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said: “I think there is still room for more rate reductions, even in light of the slight increase in inflation. Lenders are desperate to make up for a very subdued 2023.”
According to Moneyfacts, The average two-year fixed residential mortgage rate today is 5.62% and the average 5-year fixed residential mortgage rate is 5.24%. Both are unchanged from yesterday and down more than a full percentage point from late July.
