A growing number of UK lenders are cutting mortgage rates as the fallout from US tariffs continues to fuel forecasts of deeper than expected interest rate cuts.
Coventry Building Society became the largest mortgage provider to cut its two-year fixed rate to below 4% on Wednesday as several others also cut rates.
Financial markets and economists are predicting the Bank of England will cut interest rates by more than expected this year to avoid an economic downturn.
So-called swap rates, which lenders use to price loans, were below 4% on Wednesday.
According to the financial data company Moneyfacts, the average two-year fixed mortgage rate today is 5.3%, down from 5.32% on Tuesday. The average five-year fix is 5.15%, down from 5.17%.
TSB Bank, Metro Bank, and Bank of Ireland are among those who have cut rates since the start of this week.
Coventry Building Society, the UK’s eighth largest lender according to UK Finance, lowered its two-year fixed rate to the end of October 2027 to 3.89% – but the product is only for borrowers with a 65% loan-to-value and comes with a £999 fee.
Meanwhile, the Co-operative Bank will cut its two-year, three-year, and five-year fixed rates on certain purchase mortgages by 0.14 percentage points on Thursday.
Brokers expect further falls in the coming days as the “Big Six” lenders – Halifax, Nationwide, HSBC, Santander, Lloyds, and Natwest – continue to adopt a “wait and see” approach by so far not announcing any cuts.
When they drop rates, brokers say other lenders tend to follow.
Central banks cut interest rates in response to concerns of an economic downturn in the hope that cheaper borrowing will encourage more spending.
On Wednesday, the consensus among economists was that there will be four Bank of England rate cuts over the next 12 months. At the start of the week the consensus was just two.
A Nationwide spokesperson told the : “We keep our fixed mortgage rates under regular review, and we have already made a number of rate cuts over the last couple of months.”
Rachel Springall from Moneyfacts said it “traditionally takes a couple of weeks for lenders to respond to swap market volatility”.
