More UK lenders cut mortgage rates amid Trump tariff turmoil
A Wave of Mortgage Rate Cuts Sweeps the UK as Interest Rate Forecasts Deepen
As the repercussions of US tariffs continue to ripple through the global economy, UK lenders are taking action by cutting mortgage rates in anticipation of deeper than expected interest rate cuts. Coventry Building Society made headlines on Wednesday as it became the largest mortgage provider to slash its two-year fixed rate to below 4%, setting off a chain reaction of rate cuts by several other lenders.
Financial markets and economists are bracing for the Bank of England to implement more aggressive interest rate cuts this year in a bid to stave off a potential economic downturn. The so-called swap rates, which serve as a benchmark for lenders in pricing their loans, dipped below 4% on Wednesday, signaling a shift towards more affordable borrowing costs for consumers.
Current Mortgage Rate Landscape
According to Moneyfacts, the average two-year fixed mortgage rate has dropped to 5.3% from 5.32% just a day earlier, while the average five-year fix now stands at 5.15%, down from 5.17%. TSB Bank, Metro Bank, and Bank of Ireland are among the institutions that have already rolled out rate cuts this week.
Coventry Building Society, ranked as the UK’s eighth largest lender by UK Finance, unveiled a competitive two-year fixed rate of 3.89% until the end of October 2027. However, this offer is limited to borrowers with a 65% loan-to-value ratio and comes with a £999 fee, reflecting the lender’s efforts to attract creditworthy customers with favorable terms.
Future Rate Reductions on the Horizon
The Co-operative Bank is set to reduce its two-year, three-year, and five-year fixed rates on select purchase mortgages by 0.14 percentage points starting Thursday, further intensifying the competition among lenders to offer attractive rates to prospective homebuyers. Industry experts anticipate additional rate cuts in the days ahead as major players like Halifax, Nationwide, HSBC, Santander, Lloyds, and Natwest closely monitor market trends before adjusting their own rates.
Central banks typically lower interest rates in response to economic uncertainties, aiming to stimulate consumer spending by making borrowing more affordable. Economists now predict that the Bank of England could implement up to four rate cuts within the next year, a significant shift from earlier forecasts of just two cuts. This heightened speculation is driving lenders to reassess their pricing strategies and respond swiftly to market volatility.
As lenders adapt to evolving market conditions, consumers stand to benefit from a wave of rate cuts that could make homeownership more accessible and affordable for a wider range of borrowers. With the mortgage landscape in flux, borrowers are encouraged to stay informed about the latest rate offerings and explore their options to secure the best deal for their financial needs.
For more information and updates on mortgage rates, stay tuned to reputable sources like Moneyfacts and keep an eye on announcements from leading lenders in the UK.
