Mortgage price war approaches as lenders slash rates to lure homebuyers

18 April 2025, 23:03

Estate Agent for sale signs outside a block of flats in Slough, Berkshire. The Government has announced the UK Price Index for February.

Picture:
Alamy

The UK could be on the verge of a price war, with lenders expected to slash mortgage rates as competition heats up.

It comes as demand for mortgages is expected to flatline over the next few months according to new figures released as part of a Bank of England survey of UK lenders.

An increase early this year saw availability rise to its highest level since 2021, as the market saw the first handful of lenders drop their rates below 4%.

Multiple lenders including HSBC, Santander, The Co-Operative Bank and Virgin Money all announced they were set to cut rates in recent days.

It comes as further brokers look set to follow, with lenders including NatWest due to drop prices on Tuesday.

Edgbaston, Birmingham, 10th April 2025: Construction continues on brownfield land alongside existing Eco-Housing at the Port Loop construction in the Edgbaston area of Birmingham.

Picture:
Alamy

It comes as the base rate currently at four-point-five percent.

A bigger-than-expected drop in inflation on Wednesday could steer experts towards lowering the cost of borrowing.

Banks have been able to reduce their prices after a combination of Donald Trump’s tariff plans – which rocked the global markets and dampened the economy – and lower-than-expected inflation figures.

Brokers have now said that lenders are “sharpening their pencils” ahead of a “fight” for market share.

Financial markets now expect between three and four interest rate cuts in 2025.

It comes as the first remains on the horizon, with an announcement just weeks away.

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