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Decrease in interest rates

With the UK mortgage market finally starting to stabilise following weeks of financial chaos, some lenders have dropped their base interest rates – some by percentage point of as much as 0.5%*.

High street lenders including HSBC and Santander are among those who have announced decreased interest rates.

This will be welcome news for those looking to take out a new mortgage or those currently with a variable rate deal, who could stand to see a drop in mortgage repayment costs.

In this blog, we will discuss the interest rate decrease and how this affects new and existing mortgages moving forwards.

Mortgage interest rates decrease

With a new prime minister in place, and many policies that were recently announced being overturned, the UK economy looks to be a step closer to stability.

This is great news for buyers who may have been concerned about significantly increased costs following the previous announcements of higher and higher rate rises. Interest rates rose significantly in recent months with increases to 1.75% and then 2.25%.

Although it is currently unclear whether the Bank of England will further increase their rates, lenders have chosen to drop theirs. This will be an attempt to offer more competitive pricing in a tough market to appeal to prospective borrowers.

Will the interest rate decrease affect my current mortgage?

If you already have a variable rate mortgage in place, you are in a good position if you are with a lender who has chosen to decrease their rates. This includes standard variable and discount rate mortgages.

As the interest element of your mortgage repayments adjusts to your lenders base rate, a decrease means lower costs at least for the time being.

Anyone on a tracker mortgage will need to keep an eye on the Bank of England base rate and any announcements of further increases or decreases.

With the BoE rate having increased over and over this year, it could be worth considering a remortgage to either another type of variable rate mortgage or a fixed rate mortgage if you can find one with suitable terms for your needs.

To learn more about remortgaging from your current deal, speak to our experts or check out our remortgages page for more information.

Will mortgage interest rates decrease more?

It is hard to say whether lenders will continue to decrease their rates. The housing market has been in chaos in recent weeks with house prices looking set to fall over the next year. Some lenders have chosen to drop their rates to entice new buyers or those looking to remortgage into choosing them.

With the economy having been in a steady decline, if considering a new mortgage or remortgage we recommend acting now while lenders are still offering these lower rates.

It is possible if the Bank of England continues to raise their rates, lenders may follow suit and increase theirs again.

Which lender has the lowest mortgage rates?

When applying for a mortgage or remortgaging, borrowers will want to get the best possible rates. Our team of experts can check prices across the market to find the right mortgage terms for you with the most reasonable pricing.

As of now, Accord Mortgages has announced the largest drop in interest rate at 0.53%. If with this lender or considering them, you have the potential for great savings.

It is important to consider which lender is best for the type of mortgage (capital and repayment or interest only for example), length of term and desired interest rate type before making any decisions.

We would advise acting soon if wishing to take out a new mortgage with any of the lenders who have announced decreases. As lenders can change rates at their own discretion, it is not guaranteed how long these lower rates will be available for.

Mortgage lender rates

The mortgage lenders that have so far announced cuts to their interest rates include:

  • Santander
  • Accord Mortgages
  • HSBC
  • Coventry Building Society

It is hard to say if other lenders with follow suit but there may be more lenders eager to compete with these lower rates in the coming weeks.

Speak to one of our highly qualified expert advisors for further advice about how you can save on your mortgage deal. When it comes to residential mortgages we have years of expertise in all mortgage types including buy to let, first time buyer and more.

We can compare mortgages and source the most competitive pricing, meaning you can rest easy knowing you have the best possible deal in place.

*according to FTA (Financial Times Advisor)

Useful resources – Support for Mortgage Interest (SMI)

Citizen’s Advice – Deciding if you should apply for SMI

Citizen’s Advice – Buying a home – Buying or selling your home

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