NatWest cuts cost of home loans prompting hopes of lower mortgage bills for millions | Personal Finance | Finance

NatWest has announced a crucial cut to its home loan rates as struggling Britons look to the Bank of England to bring down the base rate on Thursday.

The move is the first by a major UK lender and there are hopes that others will follow suit in the coming days.

The decision was prompted by the fall in the inflation rate to 2 percent, which has triggered expectations of a series of interest rate cuts through the summer months.

NatWest is reducing its fixed rate deals by up to 0.17 percentage points from Thursday onwards.

The most aggressive cuts are for people who are remortgaging and opting for a five-year fix with a leading rate of 4.41 percent.

Finance experts have described the cuts as a “positive” move against the background of massive pent-up demand from people who are remortgaging or buying a property.

Natwest is not the only bank to introduce cuts recently, with, for example, the Co-operative Bank reducing loans by up to 0.22 percentage points.

In spite of mortgage rates seeing a small increase over the past several weeks the movement stopped over the last week, as the average two-year fix has remained steady at 5.97pc since last Wednesday.

Riz Malik, Director at R3 Mortgages said: “Despite all the politico-economic turbulence, lenders are still willing to lend and NatWest, based on this evidence, want their piece of the pie.

“With the base rate decision looming, all eyes are on the main mortgage lenders and what they will do regardless of whether we see the first rate cut since 2020 on Thursday.”

Many experts expect the Bank of England to hold the base rate at the current 16 year high of 5.25 percent on Thursday despite the clamour for cuts.

Rohit Kohli, Director at The Mortgage Stop, said the Bank “will want to maintain the air of neutrality during an election” even with inflation dropping to 2 percent.

Justin Moy, Managing Director at EHF Mortgages told Newspage: “Amid the political noise, this is a small but welcome rate cut from NatWest for new business.

“Applications have slowed across the industry in recent weeks so we could see a ripple of small changes in the next fortnight if inflation hits target or better this week. Small wins like this matter.”

Samuel Mather-Holgate, Independent Financial Advisor at Mather and Murray Financial told Newspage: “NatWest have broken the mould by making changes to their product pricing.

“With an interest rate decision due on Thursday, inflation out Wednesday and the election just around the corner, most lenders are holding firm on pricing until there is more certainty.

“NatWest have reduced rates across the board, so must be thinking that a Labour Government will usher in an era of rate cuts in the second half of 2024.”

Craig Fish, Director at Lodestone Mortgages & Protection, said: “This is a positive move from one of the Big Six. It’s more a boundary rather than a six but we’ll take it.

“Brokers and borrowers alike will all be hoping that more will follow, and like the British summer finally, inject a bit of heat into a rather dull market.”

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