Home buyers have received a pre-Christmas boost as two major lenders, Barclays and TSB, have reduced the cost of new home loans. This move is expected to be followed by other competitors in the coming days, sparking hopes for the return of sub-4 per cent mortgages.
The reductions come as worries about the Budget’s impact on inflation and interest rates begin to ease. Swap rates, the interest rates charged by financial institutions when lending to each other, have recently decreased, allowing banks and building societies to lower the cost of new deals.
This positive news coincides with finance industry experts predicting a surge in home sales in the upcoming weeks as buyers try to avoid an increase in stamp duty from April 1. Barclays has modestly reduced its new five-year fixed-rate deals by 0.14 percentage points, while TSB has made cuts of up to 0.4 percent.
Simon Bridgland, Director at Release Freedom, commented: “Borrowers could be settling down with a bucket of popcorn this week as TSB are the second lender to wade into battle today with some cinematic reductions. It feels like sub-4 percent rates are looming on the horizon.”
Iain Swatton, Director at Exemplar Financial Services, told Newspage: “With lenders starting to unwrap festive treats for borrowers, competition in the market is heating up like a glass of mulled wine. These reductions are a welcome gift for buyers and those remortgaging.”
Despite the ongoing affordability pressures, Ben Perks, Managing Director at Orchard Financial Advisers, expressed optimism. He said: “Let’s see if other lenders join the festivities and spread more cheer as we head into the holiday season. Lenders are coming out swinging as they fight for business in the final few weeks of 2024.”
David Stirling, Independent Financial Advisor at Mint Mortgages & Protection, echoed this sentiment. He said: “After weeks of eyeballing each other post-Budget, lenders are finally entering the arena to hopefully see out 2024 in truly gladiatorial style.”
Justin Moy, Managing Director at EHF Mortgages, said: “On a cold day, another High Street lender is warming the hands of mortgage borrowers with significant improvements to a number of their fixed rate deals. ”
He further noted that while the market has cooled since the Budget in October, this is the second set of rate cuts this week so far. “And with others likely to join in this week, we could see some pressure on those sub-4% deals before the year is out,” he added.