TSB Bank has announced a reduction in its two- and three-year fixed rate deals for new customers, effective from tomorrow, August 25th. The cuts will be up to 0.1 percentage point. The new two-year fixed rates, available for home purchase and remortgage deals up to 75% loan to value (LTV), are aimed at attracting customers. The three-year fix, available up to 75% LTV for remortgage, also offers reduced rates. Earlier this week, TSB had already decreased fixed rates for home purchase by up to 0.6 percentage points.
The reduction in rates by TSB and other lenders is a response to falling swap rates, which are used as the basis for fixed mortgage rates and represent the rates at which banks lend to each other. The drop in swap rates includes a decrease in two-year swaps from 5.668% to 5.484% and a decline in five-year rates from 5.017% to 4.810%.
Atom Bank, a digital app-based lender, has also announced rate cuts of up to 0.25 percentage points on fixed rates. Additionally, the bank has raised its maximum mortgage loan limit to £1 million for borrowers with a minimum 15% deposit or equity. Atom Bank is offering a two-year fixed rate at 6.44% and a five-year rate at 5.74% for remortgage deals, both without any fees and available up to 75% LTV. The bank is also providing options with fees, including a two-year fix at 6.19% and a five-year rate at 5.59%, both with a £900 fee and available at 75% LTV.
Deutsche Bank has predicted a further 3% decrease in average house prices for the remaining months of the year, resulting in an annual fall of 7%. The bank characterizes this as a correction rather than a crash, as it believes the price correction has not fully reversed previous gains. However, Deutsche Bank warns that the UK housing market still faces challenges, including persistent inflation and rising mortgage rates, which could further dampen market activity.
Other lenders have also made rate adjustments recently. Nationwide, the UK’s second-largest mortgage lender, has reduced interest rates on fixed rate deals for both new and existing customers by up to 0.4 percentage points. HSBC and Virgin Money have also trimmed their rates by up to 0.3 percentage points, targeting residential and buy-to-let mortgage deals. Santander has made similar cuts to fixed rates for residential and buy-to-let customers accessing deals through brokers, with reductions ranging from 0.02 to 0.2 percentage points.
Aldermore, Hampshire Trust Bank (HTB), and Keystone Mortgages have also made changes to their mortgage offerings. Aldermore has lowered fixed rates on its residential and buy-to-let mortgage ranges for new and existing customers by up to 0.7 percentage points. HTB has decreased selected five-year fixed rates by up to 0.7 percentage points, and Keystone Mortgages has adjusted its rates after temporarily withdrawing some products from the market.
Overall, these rate cuts and adjustments reflect the ongoing response of lenders to changes in swap rates and market conditions, as they aim to attract customers with competitive mortgage deals.