UK lenders are expected to cut their five-year fixed-rate mortgages due to a sharp decline in swap rates amid an upcoming scheme that will make more cash available to households and businesses.
The “funding for lending” scheme from the Bank of England and Treasury aims to tackle the rising cost of mortgages and loans.
“With swaps falling to their lowest levels ever in recent weeks, we have been expecting cheaper fixed rates, and these are starting to come through,” said Mark Harris, Chief Executive of mortgage broker SPF Private Clients.
The lower rates allowed HSBC to launch a five-year fixed-rate mortgage of 2.99 percent. However, this loan requires a booking fee of £1,499 (S$2,934) and a deposit of 40 percent or more.
Other lenders offering five-year mortgages at 3.79 percent include Nationwide Building Society and Clydesdale Bank (zero-fee).
While more lenders are expected to follow suit and reduce their fixed rates, brokers noted that five-year fixed-rate loans are not expected to drop below 2.99 percent.
“This is a very headline grabbing rate,” added Ray Boulger of mortgage broker John Charcol.
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