Halifax and Santander have announced cuts to their fixed-rate mortgage deals. This decision comes on the heels of the latest inflation data which has shown a decrease. These rate reductions, taking effect this week, align with growing expectations that the Bank of England might lower its key interest rate this summer, despite the fact that inflation hasn’t fallen as much as some might have hoped for an immediate rate cut.
Halifax and Santander Lead the Charge
Starting from Friday, 24 May, Halifax will reduce its two-year and five-year fixed rates for residential borrowers by up to 0.19 percentage points. This adjustment is poised to make Halifax’s mortgage offers more competitive against the current market’s best deals.
Meanwhile, Santander for Intermediaries isn’t far behind. Effective from tomorrow, 23 May, Santander will cut selected fixed mortgage rates for both residential and buy-to-let borrowers by up to 0.27 percentage points. These new rates will only be available through brokers, targeting a broad range of customers looking to secure better mortgage terms.
Impact of Inflation Data
The latest figures from the Office for National Statistics (ONS) reveal a significant drop in inflation to 2.3% in the year to April, down from 3.2% in March. This decline is fuelling speculation about a potential interest rate cut by the Bank of England, although the current inflation rate of 2.3% remains slightly above the ideal target of 2%. This could mean that the Bank of England might delay any changes to the interest rate, which is scheduled for decision on 20 June, following the release of the next inflation update on 19 June.
Market Reactions and Future Expectations
The decrease in inflation and the anticipation of a possible interest rate cut have already prompted a wave of adjustments in mortgage rates across the sector. Following Halifax and Santander, other lenders are also expected to revise their rates downwards to remain competitive.
David Hollingworth, a director at broker L&C Mortgages, commented on the situation, stating, “It’s good news to see the headline rate of inflation drop back so much closer to the Bank of England target rate. However, at 2.3%, it may bring some disappointment for those looking for signs of an imminent cut to the base rate.” He further noted that while mortgage rates have eased slightly in recent weeks, the latest inflation data might slow down any strong trend towards lower rates.
Additional Rate Cuts
Leeds Building Society is also joining the trend by reducing selected fixed mortgage rates by up to 0.2 percentage points. The cuts target deals at 75% and 90% loan to value (LTV). Moreover, Leeds has launched a new, fee-free, five-year fixed-rate deal designed to attract home buyers with a 5% cash deposit, offering a rate of 5.39%.
This flurry of rate reductions across major lenders is a clear indicator of a potentially easing mortgage market, offering a breather to current and prospective homeowners amid the economic uncertainties.