Leading banks are reducing mortgage rates in response to market predictions that central interest rates will decrease more rapidly than initially anticipated in the coming year.
HSBC has announced reductions in mortgage rates for various residential and buy-to-let properties, while Virgin Money is set to lower rates by up to 0.36 percentage points starting Thursday.
The Bank of England is anticipated to maintain its interest rate at 5.25% in its upcoming meeting. However, financial markets foresee a reduction in the Bank’s interest rates to 4.25% by the end of next year, a more significant drop than the previously expected 0.75 percentage points decrease in 2024.
Market traders are also forecasting that the Bank of England will start lowering its borrowing costs from their current 15-year peak by May at the latest, revising earlier predictions of a June start.
Recent data from the Office for National Statistics, released on Wednesday, indicated a slowing economy, which might lead policymakers to implement measures to boost economic growth.
In October, the UK’s gross domestic product decreased by 0.3%, affected by adverse weather impacting the manufacturing and construction industries.
The ONS also reported earlier this week that wage growth is decelerating at its fastest rate in two years, a trend likely to contribute to reducing inflation.
On Wednesday, two-year fixed mortgage rates fell to 5.98%, and the average rate for five-year mortgages stood at 5.59%, as reported by Moneyfacts, a financial analyst firm.
Just last week, the average rate for two-year mortgages dropped below 6% for the first time since June.
