Lenders cut fixed mortgage rates after Bailey claims they are overcharging homeowners

HIGH street banks have announced cuts to their fixed mortgage rates after the Bank of England Governor, Andrew Bailey, claimed that homeowners were being overcharged.

Halifax and Virgin Money were among the first to announce mortgage rate reductions yesterday, despite the Bank of England on Thursday announcing the largest rise in interest rates in 33 years. More than half a dozen lenders have reduced rates on fixed-rate deals since the central bank’s announcement, according to analyst Moneyfacts. After the decision Mr Bailey rebuked lenders for pricing mortgages too high.

Halifax, one of the biggest lenders in the country, confirmed it would reduce several remortgage rates by up to 0.24 percentage points from next week. The reduction has pushed some rates with the lender below the 6pc threshold. A two-year fix with a 40pc deposit and £999 fee will be priced at 5.78pc from Monday, down from 6.02pc currently.

Clydesdale Bank has also cut rates on its two and five-year mortgages by up to 0.3 percentage points, with rates now starting from 5.44pc.

Lenders said price cuts had been decided before Mr Bailey’s intervention, when the Governor said mortgage costs did “not need to rise as they have done”.

Smaller lenders have also acted to cut rates. The Cumberland Building Society yesterday cut selected fixed deals by up to 0.67 percentage points, while Yorkshire Bank cut its fixed rates by up to 0.3 percentage points.

Principality Building Society, Leeds Building Society and specialist lender Hodge have also reduced fixed rates.

Many lenders raised rates on their variable and tracker rates, which fluctuate in line with the Bank Rate, but none has so far increased rates on a fixed-rate deal since the Bank’s rate decision.

Aaron Strutt, of mortgage broker Trinity Financial, said this was good news for borrowers, but interest rates still remained inflated compared with earlier in the year. Mr Strutt said: “There does seem to have been a reversal on rates and increases on fixed-rate deals have stopped despite the Bank Rate increase, although who knows how long that will last.”