Barclays, HSBC and NatWest are among those who have adjusted rates downward along with Virgin, TSB and Santander.
This will come as welcome news to borrowers, who have been facing steep rises in mortgage rates since the start of March. But experts are warning those who are considering waiting around for more price reductions in the hope of bagging an even better deal to be cautious of this approach.
Here’s a bit more about what has been happening with mortgage pricing, and what borrowers should do to ensure they get the best rate.
Background: What’s been happening to mortgages?
Mortgage rates have been tumbling steadily in line with interest rates for nearly two years. They reached a peak in the months following the mini-Budget in 2022 and so have had quite a height from which to fall.
There are, however, 1.8 million people thought to be remortgaging this year and many of those will be coming off five-year deals secured when rates were at record lows during the pandemic in 2021.
For this reason, many people will be expecting a payment shock when they remortgage in 2026.
They may have been taking heart from the fact there were some competitive deals – some below 4% – available in early 2026. But when the war in Iran began, things changed fast. The closure of the Strait of Hormuz, which blocked oil supply routes, had an impact on the markets, and this also hit mortgage pricing.
It meant lenders ditched all their best rates to cover their risk and began increasing prices to enable them to meet their own funding costs.
Why are mortgage rates falling again?
When the ceasefire was announced in Iran, this provided some breathing space for lenders. Although the situation was – and still is – uncertain, the easing of tensions provided some market stability and this gave mortgage lenders some confidence.
David Hollingworth, associate director at L&C Mortgages said this stability and easing in the outlook for interest rates has allowed lenders to cut back their rates.
How much are typical mortgage rates this week?
As a result of the cuts average mortgage rates have now fallen a little – but not enough to return to the level experienced before the war began.
According to Moneyfacts, the typical two-year fixed rate mortgage is currently 5.81%. This is much lower than the 5.90% on 12 April, but also much higher than the 4.83% average at the start of March.
The same can be said of five-year fixed rates which, according to Moneyfacts, are averaging 5.81% today – lower than the 5.70% on 12 April but much higher than the 4.95% borrowers were benefiting from when March began.
Adam French, head of consumer finance at Moneyfacts, said: “While it’s important to bear in mind that rates remain almost a full percentage point higher than before the conflict in Iran began, adding roughly £1,700 a year to the cost of a typical mortgage, average rates have fallen by almost 0.1 percentage point from their peak, saving a typical borrower approximately £145 annually.”
What’s the advice to borrowers? Move now or wait for more reductions?
Most brokers are advising, if you need to move or remortgage, it’s important to follow your own timeline rather than try to second guess the markets.
Indeed, David Hollingworth thinks borrowers should expect uncertainty in the markets. “Those keen to secure a fixed rate should still lock in a rate, rather than hold off in the hope of further falls,” he said.
“We’ve seen how quickly things can change, so it’s better to protect against the potential downside of rates climbing further. It’s still possible to review the deal before completing and move to a lower rate if rates have continued to fall.”
Will interest rates go up?
There were concerns the Bank of England might raise interest rates as the threat of inflationary pressure intensified during the conflict in Iran. Although inflation increased to 3.3% in March the expectation is the Bank of England will keep rates on hold on Thursday (30 April), when its next rate setting announcement is due.
This does, however, mean there is unlikely to be a cut in rates for a while. Fixed rate mortgage pricing is influenced more by Swap rate. As such, those on tracker or variable mortgages are more likely to be affected by any changes to the interest rate.
Adam French said: “The upcoming Bank of England base rate decision is unlikely to offer much immediate relief for borrowers. With inflation set to rise further in the coming months, rate-setters are expected to act with caution and favour a hold for now.
“Instead, attention will turn to what the Monetary Policy Committee has to say for clues on the future path of rates, leaving money markets in the driving seat for the time being.”