Mortgage lenders cut rates on new deals on Friday, bringing a small but meaningful relief to buyers after the sharp rise in borrowing costs tied to the Iran war. Major high street lenders are trimming fixed mortgage pricing as markets react to hopes of a longer-term truce and falling swap rates. The move is helping first-time buyers, but the market remains fragile and rates can still shift quickly.
Rate Cuts Spread Across Major Lenders
Halifax, HSBC and Santander have all lowered rates on new fixed mortgage deals, with more reductions expected from HSBC UK, Halifax Intermediaries and BM Solutions from Friday. Santander also made cuts on Thursday after passing on lower borrowing costs linked to a fall in swap rates.
For buyers and borrowers, the timing matters. Many had budgeted for lower mortgage costs before the recent jump in borrowing expenses, and the sudden rise left households exposed to higher monthly payments and tighter affordability checks. Mortgage lenders cut rates now appear to be responding to a brief period of calmer market expectations, rather than a settled return to cheaper borrowing.
Buyers Say the Change Brings Relief
Amy Worrell, 26, and her boyfriend Tommy Adeyemi, 30, are buying their first home together in Hertfordshire after saving hard for five years. The mortgage rate they expected rose sharply within days, but they now hope it may fall back before they complete the move.
“It makes such a big difference, ” Amy Worrell said. “We’ve already had to extend our mortgage by five years to 40 years. ” She said the couple are both in good jobs, still live at home to avoid high rents, and have made sacrifices in their 20s to save money. “Having a home shouldn’t be a luxury, ” she said. “I worry about how someone working in a supermarket could get a home. ”
The pressure is not only in mortgage pricing. Worrell, who drives to work as an assistant buildings manager five days a week, is also facing higher petrol prices linked to the war. Official data from the Office for National Statistics showed that 67% of adults reported higher living costs in March, with fuel and food the main drivers.
Why Rates Are Moving Now
Lenders are heavily influenced by swap rates, a financial market measure that reflects expectations for future Bank of England interest rates. Hopes of an end to the war, or at least a temporary ceasefire, have eased fears of runaway inflation and lowered market expectations for Bank rate rises.
That shift has given lenders room to move. Adam French, head of consumer finance at Moneyfacts, said average mortgage rates have held steady since Easter and that rising mortgage rates appear to have plateaued for now. He said product numbers have been improving, but they are still below levels seen before the conflict began.
French added that money markets are now pricing in fewer base rate hikes than they were a few weeks ago, with swap rates falling back towards 4% from highs around 4. 4%. He said lenders including Santander, Atom Bank and Skipton Building Society have had the headroom to make “a few meaningful cuts” over the last few days.
What Happens Next
Experts say mortgage lenders cut rates momentum is building, but they warn the situation remains delicate. Aaron Strutt of Trinity Financial said the price cuts are getting more momentum and will come as a relief for borrowers trying to get on the property ladder soon.
At the same time, the path ahead is uncertain. Swap rates remain volatile, mortgage pricing is still driven by expectations, and borrowers are still exposed to sudden shifts. For now, mortgage lenders cut rates have offered some breathing room, but the market is not yet stable.
