As the news filtered through that the Bank of England had decided to keep interest rates stable at 5.25% for the fifth consecutive time on the 21st of March 2024, mortgage lenders have reacted to what it means for their clients.

It was a decision that came only a day after the Office of National Statistics announced the annual inflation rate in the year to February had fallen to 3.4%,  from 4% in the 12 months to January.

This was not enough to convince the Bank of England to cut rates just yet and reducing your mortgage borrowing costs, as the battle against inflation goes on.

 UK mortgage markets big players counter Bank of England rate decision

Natwest responded quickly to the news that interest rates were going to remain the same and reduced some of its fixed rate mortgage packages, and decreased  remortgage rates by up to 0.24%.

Its two year tracker mortgage offerings all increased, for example on a 60% loan to value (LTV) mortgage, or the ratio of the value of the home and the loan that you will need to buy it, is to rise to 5.79% from 5.39%.

While its 5-year fixed rate mortgage packages were all reduced, as its reasonable to expect the long term mortgage rates to come down perhaps soon.

On March 26 three other of the UK’s major lenders all announced that they are to cut several of their fixed rate deals.

Santander have said that they will reduce many of its fixed rate and buy-to-let deals, if you are looking to buy a house as an investment by up to 0.21%, and will come into effect from March 28.

One of its new deals to look out for is a competitive five-year remortgage offer with a fixed rate of 4.34%..

HSBC have made adjustments following the interest rate decision.

Some of its select rates at higher-LTV bands of 90% or 95% will be reduced across two, three and five-year fixed rate mortgages for borrowers, and this is aimed towards those who are buying or moving home.

While Barclays have also made its moves, with an 0.25% reduction on a selection of its residential and remortgage packages.

From March 27 its two year fixed rate remortgage product at 75% LTV is to fall from 4.90% down to 4.70%, although this comes with a £999 product fee.

While its two year fixed rate mortgage item at 75% LTV is to be cut down by 0.25% to 4.90%, with no product fee involved.

For those who are looking more towards the buy-to-let market should check out The Mortgage Works, who are a specialist arm of Nationwide’s mortgage business.

It’s offering up to a 0.15 % reduction from March 26 on many of its products.

Looking ahead its widely expected amongst most market analysts including mortgage lenders that interests rates will come down in the second half of this year, and that the Bank of England’s rate raising how now reached a peak if inflation continues to fall which is also anticipated.

Lenders will be looking to cut rates to reflect the market trends, and offer borrowers more certainty which will be easier on the pocket.

How interest rate effects mortgage types and your borrowing costs

Interest rates will effect most people who have a mortgage in some way, and how much more or less you have to pay on your mortgage depends on the type of mortgage that you have or may have if you are looking to buy.

A fixed rate mortgage does not change when interests rates do, although if you are coming to the end of your fixed rate term you will need to contact your mortgage adviser, and remortgage your property before your rates could rise.

While a standard variable tracker mortgage is typically set by the mortgage lender, and usually follows the base rate movements of the Bank of England.

Lenders are highly likely to pass on any interest rate rise onto its customers, and mortgage repayments could rise quickly in time for when your next payment is due.

It would be wise to contact your mortgage lender if you have not heard from them if interest rates rise, and bear in mind there are no penalties involved for switching to another standard variable deal.

A tracker rate mortgage usually moves with the Bank of England base rate plus a few percentage points added on top.

Usually they last between two and five years before they revert to a standard variable mortgage.

Whereas discounted mortgages rates are set below a standard variable rate for a certain time, but they increase at the same time as the standard variable and the Bank of England rate.