Full list of lenders cutting mortgage rates after Bank of England announcement
MORTGAGE lenders have raced to slash their rates after the Bank of England cut the base rate earlier this afternoon.
Within five minutes of the announcement, Santander announced that it would decrease all tracker and standard variable rate mortgages by 0.25%.
Coventry Building Society, Barclays, Metro Bank and Virgin Money soon after followed suit.
It comes after several lenders cut their fixed mortgage rates in anticipation of interest rates falling for the first time in four years.
Even if your lender has cut rates, the dates your repayments actually change will depend on when your payment is due.
The Bank of England‘s (BoE) Monetary Policy Committee cut the base rate from 5.25% to 5%.
This sets the rate of borrowing charged to smaller high-street banks and lenders, which is passed on to consumers.
The central bank’s decision comes after the Office for National Statistics (ONS) revealed inflation stood at 2% in June.
The BoE’s base rate previously increased from historic lows of 0.1% in December 2021 to 5.25% in July 2023, which it was at until today’s drop.
If interest rates fall, it usually means mortgage rates will too.
When you will see the fall take effect depends on which type of home loan you have.
Those on tracker and standard variable rate (SVR) mortgages usually see an immediate change in payments.
A tracker mortgage is a type of variable mortgage, meaning your monthly payments can rise and fall in line with the Bank of England base rate.
With a tracker rate mortgage, you’ll usually pay the base rate plus an additional percentage in interest every month.
A standard variable rate mortgage is what you revert to once any initial mortgage term ends.
This rate will change in line with the base rate and is normally higher than any initial introductory rate.
There are 643,000 customers on tracker mortgages and 624,000 on SVRs.
UK Finance says today’s 0.25% rate cut will immediately save homeowners £28.44 a month or £341 a year on the average tracker mortgage.
Those on fixed-rate mortgages won’t see anything change until their deals end and they take out a new one.
But while it’s good news for mortgage holders, savers could get less interest on their money.
We’ve listed all the lenders cutting mortgage rates below.
Barclays
If you’ve got a tracker or variable rate mortgage with Barclays, your mortgage rate will fall by 0.25% on September 1.
A Barclays spokesperson said: “Following the decision by the Bank of England to decrease its base rate, we will be decreasing our rates across tracker mortgage and Barclaycard products.”
If you have a fixed-rate mortgage, the base rate change won’t affect the amount you currently pay.
The bank’s fixed rates remain unchanged.
Clydesdale and Yorkshire Bank
The residential standard variable rate will decrease from 9.24% to 8.99%.
The residential offset variable rate will decrease from 9.45% to 9.20%.
An offset mortgage is a type of mortgage that is linked to one of your savings accounts.
The money in your savings isn’t used to pay off your mortgage.
Instead, it’s used to lower the total interest you’ll be charged on your repayments each month.
The bank’s buy-to-let revert rate, offset variable investment housing loan rate, will decrease from 9.74% to 9.49%.
The revised rates will take effect for existing customers from their next payment date after August 22 and for new
customers from August 15.
Both bank’s fixed rates remain unchanged.
Coventry Building Society:
Coventry Building Society will cut all variable mortgage rates, including tracker rates, by 0.25% from September 1.
Kevin Purvey, director of mortgages at Coventry Building Society, said: “We try to make interest rate decisions as quickly as we can to give our members the earliest possible benefit from the changes.
“It’s welcome news for our SVR and tracker mortgage members who will see their mortgage payments decrease from the start of September, potentially saving them hundreds of pounds a year.”
The leder’s fixed rates remain unchanged.
Halifax
Where a customer has a mortgage that tracks the bank base rate, their rate will be cut with immediate effect in line with their terms and conditions.
The Halifax homeowner variable rate, currently at 8.74%, will decrease by 25bps to 8.49%.
The Halifax standard variable rate, currently at 8.74%, will decrease by 25bps to 8.49%.
All changes will come into effect for existing customer accounts from September 1.
The bank’s fixed rates remain unchanged.
HSBC
With effect from Friday, August 2 all HSBC tracker rates will include the reduced Bank of England base rate.
However, the bank has no plans to reduce its residential standard variable rate.
It will also keep the buy-to-let standard variable rate at its current level.
The bank’s fixed rates remain unchanged.
Lloyds Bank
Where a customer has a mortgage that tracks the bank base rate, their rate will be cut with immediate effect in line with their terms and conditions.
The Lloyds Bank homeowner variable rate, currently at 8.74% will decrease by 25bps to 8.49%.
The Lloyds standard variable rate, currently at 7.25% will decrease by 25bps to 7.00%
All changes will come into effect for existing customer accounts from September 1.
The bank’s fixed rates remain unchanged.
How to get the best deal on your mortgage
IF you're looking for a traditional type of mortgage, getting the best rates depends entirely on what's available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
Metro Bank
A Metro Bank spokesperson said: “In line with the Bank of England decreasing the base rate from 5.25% to 5% we’re updating all retail mortgage products that track the Bank of England base rate.
“We are confident that our wide range of mortgages continue to meet our customers’ needs but we encourage anyone who may be worried about their payments to get in touch to discuss their options.”
These changes have come into effect immediately and will be reflected in your next monthly payment on impacted accounts.
Metro Bank said it would formally confirm the changes on its website, and all impacted customers would receive communications about them over the next couple of days.
The bank’s fixed rates remain unchanged.
MPowered Mortgages
MPowered Mortgages, the lender issuing instant offers, made wholesale cuts to its range of fixed-rate mortgages last night ahead of the BoE base rate decision.
The new rates launched at 5.30pm on Wednesday, July 31.
Five-year fixed rates start at 4.14% for 60% LTV with a £999 fee for new purchase customers.
Stuart Cheetham, CEO of MPowered Mortgages said earlier: “With the Bank of England decision clearly on a knife edge, we thought we’d give borrowers some good news in advance by reducing our fixed rate mortgages ahead of the announcement.
“The rate cuts are substantial, particularly in the five-year space and are designed to offer very competitive rates across all LTVs, not just rate grabbing headlines!”
The lender’s tracker and standard variable mortgage rates remain unchanged.
Nationwide
Mortgage customers on Nationwide’s standard mortgage rate (SMR) will see a decrease of 0.25%.
The new SMR of 7.74% will come into effect on September 1.
Rates on tracker mortgages held by existing customers automatically decrease when the Bank rate is cut, so these will decrease to reflect the Bank rate change from September 1.
The lender’s fixed rates remain unchanged.
Santander
All Santander tracker mortgage products linked to the base rate will decrease by 0.25% from September 3, 2024.
This includes the Santander Follow-on Rate (FoR), which will decrease to 8.25%.
The Santander standard variable rate (SVR) will also decrease by 0.25% to 7.25%, passing on the full base rate decrease from September 3 2024.
The bank’s fixed rates remain unchanged.
Virgin Money
Virgin Money has confirmed cuts to its mortgage variable revert rates.
It will pass on to customers the full Bank of England base rate reduction of 0.25% which was announced on August 1.
The residential standard variable rate (SVR) will decrease from 9.24% to 8.99%.
The loyalty rate for qualifying residential customers who have held a Virgin Money mortgage on the same property for seven years or more will decrease from 8.99% to 8.74%.
The buy-to-let variable rate will decrease from 9.44% to 9.19%.
The revised rates will take effect for existing customers from September 1 and for new customers from August 22.
The bank’s fixed rates remain unchanged.
Different types of mortgages
We break down all you need to know about mortgages and what categories they fall into.
A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.
Your monthly repayments would remain the same for the whole deal period.
There are a few different types of variable mortgages and, as the name suggests, the rates can change.
A tracker mortgage sets your rate a certain percentage above or below an external benchmark.
This is usually the Bank of England base rate or a bank may have its figure.
If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.
A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.
SVRs are generally higher than other types of mortgage, so if you’re on one then you’re likely to be paying more than you need to.
Variable rate mortgages often don’t have exit fees while a fixed rate could do.