Mortgage rates start to drop despite rise in Bank of England base rate

2 min Read Published: 10 Aug 2023

Mortgage rates start to drop despite rise in Bank of England base rate

Halifax joins HSBC, Nationwide and TSB as one of the latest mortgage lenders to reduce fixed-price mortgage rates in the last few weeks. Halifax is set to reduce fixed-price rates by 0.71 percentage points from Friday 11th August 2023 with a 5-year fixed-rate deal reducing from 6.10% to 5.39%. Lenders  Nationwide, TSB and HSBC have all reduced fixed-rate product rates recently by 0.55, 0.40 and 0.20 percentage points respectively.

The reduction in interest rates may come as a surprise to some considering that the Bank of England decided to increase the base rate by a further 0.25% on Thursday 3rd August 2023, the 14th consecutive rise since December 2021. In this article, we look at what the reduction in mortgage rates means for borrowers as well as what you can do if you're struggling to afford your mortgage.

What do rate reductions mean for borrowers?

Those looking to remortgage

Borrowers looking to remortgage in the coming months may benefit from the reduction in the mortgage interest rates, meaning their monthly mortgage payment will not jump as much as previously expected. While the rate reductions are positive for borrowers, mortgage rates are still high, especially when compared to 2021 when many would have fixed their previous mortgage deals.

The exact rate that you can expect to pay on your mortgage will vary depending on a number of factors including how much you owe on your mortgage, your Loan-to-Value and your affordability. You can use our mortgage repayment calculator to predict how much you can expect to pay and our mortgage comparison tool will help you to find out the best rates for your circumstances. It is, however, always advisable to speak to a mortgage broker* when remortgaging as they can search the market to help you find the best deal based on your personal circumstances.

First-time buyers

If you have already received a formal mortgage deal offer from your lender it is unlikely that you will benefit from a recent reduction in fixed rates. However, if the rate you have been given has not yet been secured you may be able to switch to a better deal. It is best to speak to your lender or mortgage broker if you have any questions. It is also worth considering that amending a mortgage deal could affect the amount you can borrow as your affordability may change.

Home movers

If your mortgage application is complete and you are set to move home it is unlikely that you will benefit from the latest reduction in fixed-rate mortgage deals. If you have a tracker or variable-rate mortgage you should check with your lender to see if you will be affected.

What to do if you cannot afford your mortgage

If you are struggling to afford your mortgage, or are worried about the cost of your repayments when you are due to remortgage it is worth contacting your lender. Most lenders have to help consumers struggling to afford payments and so they may be able to provide additional support. The sooner you speak to your lender and get help, the better it will be.

If you wish to speak to a debt organisation or charity and wish to receive further financial support, you can do so by contacting the following charities. Additional information can be found in our article, 'Where to get free debt help and advice'.




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