Lenders slash mortgage rates despite Bank of England base rate hike 

Lenders are slashing mortgage rates despite the Bank of England raising the Bank Rate last week.

Virgin Money has today launched a five-year fixed remortgage deal at 3.95 per cent, undercutting HSBC which brought out a 3.99 per cent deal yesterday. 

It was the first lender to offer a five-year fixed-rate deal below 4 per cent since early October.

In addition Virgin is offering a five-year fixed deal at 3.99 per cent for house purchases.  

HSBC has cut its rate for those remortgaging with a 40 per cent stake by 0.3 percentage points down to 3.99 per cent with a £999 fee. 

Last week, Lloyds and Virgin Money both lowered their ten-year rates to 3.99 per cent.

HSBC’s new deal marked the first five-year offer below the 4 per cent mark since the mini-Budget in September sent rates soaring. 

The last five-year fixed deal below this was axed in early October as rates rose sharply before peaking in mid‑November. 

Nationwide is also offering reductions of up to 0.75 percentage points on its ten-year fixed deals. For those remortgaging with a 15 per cent stake there’s a five-year fixed rate of 4.49 per cent.

First-time buyers with just a 5 per cent deposit can bag a five-year fixed rate of 5.59 per cent.

The average five-year fixed rate is currently 5.14 per cent, while two-year deals sit at 5.42 per cent, according to Moneyfacts.

The Bank of England hiked base rate last week by 0.5 percentage points to a 14-year high of 4 per cent. 

But forecasts predict inflation has peaked, with the Bank indicating this may be its last consecutive increase.  

Ashley Thomas director at mortgage broker Magni Finance said, ‘Rates are coming down rapidly, and I wouldn’t be surprised to see them at 3.5 per cent or lower in the coming weeks. It is a welcome change in light of the large increases we saw during the closing stages of 2022.’

l.purkess@dailymail.co.uk