The Co-operative Bank and TSB are the latest lenders to cut their tracker and standard variable rates.
The lenders, follow Santander and Yorkshire Building Society which also lowered their variable rates last week.
Mortgage rates have fallen following the Monetary Policy Committee’s decision to cut the Bank of England base rate from 4.75% to 4.5% last week.
The Bank’s nine-member MPC agreed on the reduction in a 7-2 vote split.
Laura Suter, director of personal finance at A J Bell, said the 0.25% fall would mean someone with £125,000 of mortgage borrowing would see their monthly mortgage payments fall by £18 a month, or over £200 a year, while someone who had borrowed £400,000 on a mortgage would save £58 a monthly saving – or almost £700 a year.
The Co-operative Bank has reduced its standard variable rate by 25 basis point as has TSB, which has reduced some of its residential and landlord variable rates.
Rate changes at the Co-operative Bank as reported by Mortgage Strategy include:
- Lifetime trackers cut by 0.25%
- Standard variable rates fall to 7.37% from 7.62%
- Buy to let two-year tracker cut by 0.25%
- Lifetime tracker cut by 0.25
Meanwhile, TSB has cut homeowner variable rates to 7.99% and buy to let variable rates to 8.84%.
Suter said those tied into a fixed rate faced a waiting game.
She said: “Two-year fixed rates are now higher than they were in November last year and only a smidge lower than February last year** – despite two base rate cuts since then, while five-year rates are higher than two years ago.
“Homeowners have the turmoil in the bond markets to thank for their higher mortgage bills. While mortgage rates are linked to the base rate, they aren’t directly based on them.
“Instead, they are reliant on swap rates, which track government bond yields – so bond market turmoil raises yields, increasing borrowing costs for banks and, in turn, mortgage rates.”
