Four major banks lower fixed rates in bid to capture business before the Budget
Four of the UK’s largest high street lenders have embarked on a fresh round of mortgage rate reductions, signalling the return of competitive pricing as inflation steadies and the housing market cools ahead of the Budget.
Santander, NatWest, Barclays and HSBC have each trimmed their fixed-rate products in recent days, with cuts of up to 0.36 percentage points. The repricing follows a fortnight-long decline in swap rates—the benchmark measure used by banks to price fixed-term borrowing—and comes as markets anticipate earlier-than-expected reductions to the Bank of England’s base rate, currently 4 per cent.
The easing in mortgage pricing coincides with September’s Consumer Prices Index remaining unchanged at 3.8 per cent, below economists’ forecasts of 4 per cent. Falling food costs contributed to the stable reading, marking the first sign of sustained moderation in inflation since early summer.
Lenders compete for borrowers
Industry experts suggest that the coordinated reductions reflect both easing funding costs and a concerted effort to stimulate sluggish mortgage activity in the run-up to the November Budget.
Graham Taylor, managing director of Hudson Rose, said lenders had been encouraged by recent economic data but remained cautious about the longer-term outlook. He noted that the timing of the cuts hinted at “competition for business in a slower market” and that many institutions were “looking to build pipeline for 2026” after a quieter autumn. Mr Taylor added that falling swap rates over the past month had given banks access to cheaper wholesale funding, enabling them to pass on modest savings to borrowers.
Adrian Anderson, director of Anderson Harris, said lower swap rates had “enabled lenders to cut fixed rates” but warned against assuming this marks the start of a sustained downward trend. He pointed to continuing global uncertainties—including tariffs, inflationary pressures and political instability—as factors likely to limit how far pricing can fall.
Mr Anderson added that many lenders were seeking to bolster their application volumes before year-end, particularly as consumer confidence in the property market remains subdued ahead of the Budget. With quieter pipelines and annual targets looming, “reducing rates is an opportunity to increase the flow of applications,” he said.
Borrowers regain negotiating power
The shift in pricing is a welcome development for both homebuyers and remortgagers after a static six weeks in the fixed-rate market. NatWest currently offers one of the most competitive two-year fixes at 3.77 per cent for loans up to 60 per cent loan-to-value, while Barclays and HSBC have repriced similar products to 3.86 per cent and 3.84 per cent respectively.
According to Financial Conduct Authority data, around 950,000 homeowners are due to roll off fixed-rate deals within the next six months. Brokers say those borrowers are now likely to benefit from improved rates and should consider securing a new deal ahead of the Budget, when any changes to fiscal policy could alter market sentiment.
Borrowers can typically reserve a rate with a lender up to six months in advance and switch to a cheaper product later if pricing continues to fall—a flexibility that could prove valuable in an uncertain economic climate.
Competition heats up
The coordinated cuts mark a renewed push for market share among high street lenders. Should swap rates continue to ease, further reductions could follow, though much will depend on the economic signals that emerge from next month’s Budget. For now, borrowers are the clear winners, as lenders vie to rebuild momentum in an otherwise cautious market.
