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The average two-year fixed rate deal is now 6.79pc, dropping slightly from last week according to data from analyst Moneyfacts. Borrowers taking out a five-year fixed rate will now pay 6.28pc on average.
“Lenders are passing on somewhat overdue discounts leftover from the positive US and UK inflation data of a few weeks ago,” said Chris Sykes, of broker Private Finance.
“They have always been fast to increase rates so as to not affect margins, but are slower to pass any discounts onto borrowers as they watch the market and make informed decisions.”
Other lenders including Bank of Ireland (UK), Accord Mortgages and Saffron Building Society have also cut rates this week.
However, banks have warned that borrowers should be prepared for a new normal of higher mortgage rates as there is no “silver bullet” to bring down prices.
Roland McCormack, director of mortgages at TSB, expected rates to remain at today’s levels for the rest of the year, before settling between 4pc and 6pc in the medium term.
Others expect similar market conditions. Zoopla’s executive director, Richard Donnell, has predicted mortgage rates below 5pc to make a return to the market later this year, before they settle between 4pc and 5pc.
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