Wednesday, September 27, 2023

Mortgage Rates Drop Amid Unexpected Inflation Figures

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  • Mortgage rates have fallen following better-than-expected inflation figures last week.
  • Nationwide, TSB, Barclays, HSBC, Coventry Building Society, and Skipton Building Society cut rates.
  • The average two-year fixed mortgage drops to 6.83%, five-year deals to 6.34%, and two-year buy-to-let rates to 6.94%.
  • Inflation eases to 7.9%, below the expected 8.2%, leading to lower rate predictions.
  • Mortgage lenders fight for business, and swap rates fall, signaling potential rate cuts from other lenders.


Mortgage rates have fallen following better-than-expected inflation figures last week. Major lenders across the board are taking steps to reduce fixed mortgage rates, providing potential relief to borrowers. Nationwide, one of the country’s leading lenders took the lead by announcing a reduction of up to 0.35 percentage points in fixed mortgage rates.

Not to be outdone, TSB also made a significant cut of up to 0.55 points on its two-year purchase and remortgage products. Barclays followed suit by lowering its rates by up to 0.15 points, and HSBC initiated the trend with a rate cut of 0.35 points earlier in the week.

As lenders compete for borrowers, the average two-year fixed mortgage rate has dropped to 6.83%. Meanwhile, five-year fixed deals have fallen to 6.34%, and two-year buy-to-let rates have seen a decline to 6.94%.

Inflation figures have also brought relief as it eased to a 16-month low of 7.9% in the year to June, down from 8.7% in May and well below the expected 8.2%. The markets have adjusted their predictions for the Bank Rate, with it now being priced in at a peak between 5.75% and 6%. This is down from previous expectations of 6.75%.

Brokers predict that other lenders will likely follow suit with rate cuts as they vie for business in the competitive mortgage landscape. Despite the positive trend, brokers advise caution as further inflation data is expected in the next two weeks.

Any unexpected inflation spikes could potentially push rates back up, impacting borrowers’ mortgage costs. While mortgage rates have seen a decline, some brokers believe that rate increases in recent months may have been slightly excessive.

As lenders have already accounted for the anticipated increase in the Bank Rate from 5% to 5.25% next week, they are confident that this move is unlikely to have a major impact on mortgage rates.

In conclusion, the recent fall in mortgage rates offers an opportunity for borrowers to secure more favorable deals. However, borrowers are advised to approach their mortgage decisions with caution and carefully monitor any future inflation data that may impact rates. Lenders are striving to attract business by providing competitive rates, making this an advantageous time for potential homeowners and those considering remortgaging.

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Ethan Rivers
Ethan Rivers
Hi there! I'm Ethan Rivers, a financial enthusiast and the proud author behind the popular financial blog, "Roms Deals." With a passion for helping others achieve financial freedom, I've spent years diving deep into the intricacies of personal finance, investment strategies, and wealth management. Through my blog, I aim to demystify the world of finance and provide practical tips that anyone can apply to their financial journey. Having worked in the financial industry for over a decade, I've gained valuable insights and experience that I love sharing with my readers. From navigating the stock market to maximizing savings, I strive to equip individuals with the knowledge and tools they need to make informed financial decisions. Join me on this exciting journey towards financial empowerment and let's unlock the doors to a brighter financial future together. Welcome to "Roms Deals"!

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