Hope for millions as major banks launch mortage ‘price war’ – can you get a better deal?

BIG lenders have launched a new mortgage ‘price war’ giving hope to millions.

First Direct, Halifax and NatWest joined a host of major lenders in announcing cuts to their mortgage rates.

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First Direct says it has reduced interest rates on more than 20 of its 2-, 5-, and 10-year fixed-rate mortgages by up to 0.20 percentage points, effective immediately.

Halifax said it is reducing five-year fixed-rate mortgages by 0.71 percentage points and two-year fixed-rate loans by as much as 0.27 percentage points.

NatWest is also reducing five-year fixed-rate mortgages by up to 0.65 percentage points.

The mortgage cuts in Halifax and NatWest will take effect from Friday.

Several major mortgage lenders cut rates this week, amid signs that persistently high inflation is easing.

The Bank of England uses an increase in the base rate, which affects borrowing costs, as a tool to curb inflation.

According to the Office for National Statistics (ONS), the UK consumer price index (CPI) was 7.9% in June, slowing from 8.7% in May.

This has fueled expectations that the prime rate may not need to go so high.

Among the rate cuts, HSBC has cut up to 0.35 percentage points for some homebuyers, first time buyers and mortgage rates, as well as added a £500 cashback offer on select transactions. pandemic.

Nationwide previously announced a reduction of up to 0.55 percentage points on fixed mortgage products from Wednesday.

And, earlier this week, TSB announced a reduction of up to 0.4 percentage points on select 5-year fixed-home mortgages, with rates starting at 5.44%.

The swap rate, which underpins fixed mortgage rates, has now stabilized amid expectations that inflation is cooling.

It comes after the Bank of England last week raised its benchmark interest rate from 5% to 5.25% – the 14th consecutive increase.

Based on Moneyfactscompare.co.ukThe two-year average residential mortgage rate on Thursday was 6.83%, unchanged from Wednesday.

The five-year median residential mortgage rate was 6.33%, down from the 6.34% average on Wednesday.

“The relative stability of swap rates, which underpin the pricing of fixed-rate mortgages,” said Mark Harris, chief executive officer of mortgage brokerage SPF Private Clients. has led more and more lenders to trust where they can price their products.

“Those who have already reduced their rates should be applauded for doing so and hopefully those who haven’t yet will soon follow suit.”

Experts have said that now is the best time to talk to a realtor if you’re looking to get a mortgage or buy a new home.

“For those who currently have a mortgage application or are running low on fixed-rate, now is the time to talk to a broker who can certainly help,” said Nicholas Mendes, director of mortgage engineering at John Charcol. financially beneficial.

“A broker will be able to notify you of any rate changes to ensure you get the best rate through to completion.”

How to find the best mortgage interest rate

Get the best rate for a mortgage depending on what’s on the market at any given time.

That said, there are several ways you can strike a good deal.

In most cases, the larger the deposit you have, the lower the percentage you get.

If you’re on a mortgage and your loan-to-value ratio has changed, this can also help you access better rates than before.

Your loan-to-value ratio is the ratio between the amount you took out on your mortgage to the amount you paid as a deposit.

For example, if you take out a £160,000 mortgage to buy a £200,000 home, the loan-to-value ratio is 80%.

If your credit score improves or your salary goes up, this could indicate you’re also offering better mortgage rates.

And if you are about to close a fixed deal then you should find a new one.

Sometimes, you can lock existing transactions up to six months before your current transaction ends.

Before this time, you will normally have to pay an early exit fee.

However, depending on the cost and how much you can save by switching versus sticking, it may be worth paying to walk away from the deal.

Make sure you compare costs in advance to find out where you can save the most money.

Meanwhile, you can find the best deal by using a mortgage comparison tool. This will show you what is available online.

Or, you can use a mortgage broker that can compare deals for you.

They may charge you for the service but must tell you the cost in advance.