HSBC now also cutting mortgage rates

After the Bank of England hinted at a summer base rate drop, HSBC and two other large lenders lowered mortgage rates.

On Tuesday, Barclays reduced the price of its fixed-rate house loans for new agreements, mirroring a previous action by NatWest.

On Wednesday, HSBC will start implementing layoffs, and brokers anticipate that other mortgage companies will follow suit.

These cuts, meanwhile, are minimal when considered from a larger perspective. Even with the present lower agreements expiring, many borrowers would have to make much larger monthly repayments because of the still-high charges.

Throughout the election campaign, there was no new competition among lenders, which caused average mortgage rates to gradually rise.

The financial information provider Moneyfacts states that the average rate on a two-year fixed agreement is 5.96%. It said that the rate on an average five-year contract was 5.53%.

A fixed mortgage's interest rate stays the same until the agreement ends, often after two or five years, and a new one is selected to take its place. People would be placed on a variable rate, which may be quite costly, if nothing were done.

This year, almost 1.6 million current borrowers' comparatively low-cost fixed-rate agreements come to an end.

The home market usually picks up in the spring, but this year's activity may have been muted as purchasers wait for greater political stability.

Additionally, investors will be observing if the Monetary Policy Committee (MPC) of the Bank of England, which determines interest rates, decides to lower them at its upcoming meeting on August 1.

A big shift in tone occurred at the previous meeting last week, suggesting that a majority may vote for one.

(Sources: bbc.co.uk)