Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage change.

What is a fixed-rate mortgage?

A fixed-rate mortgage is a type of home loan where the interest rate remains the same throughout the life of the loan, providing predictable monthly payments.

What are interest rates?

Interest rates are the cost of borrowing money, expressed as a percentage of the loan amount. They can fluctuate based on economic conditions and central bank policies.

What is the Bank of England?

The Bank of England is the central bank of the United Kingdom, responsible for setting monetary policy, issuing currency, and maintaining financial stability.

A mortgage is a loan specifically used to purchase real estate, where the property serves as collateral for the loan.

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UK lenders step up mortgage price battle as inflation slows

Published by Jessica Weisman-Pitts

Posted on November 15, 2023

2 min read

Last updated: January 31, 2026

UK mortgage rates drop as lenders compete amid slowing inflation - Global Banking & Finance Review — Image depicting the competitive landscape of UK mortgage lenders reducing rates as inflation eases, highlighting the latest trends in the banking sector.

UK lenders step up mortgage price battle as inflation slows

By Iain Withers

LONDON (Reuters) – British lenders have accelerated price cuts on mortgages as competition intensifies, inflation slows and markets increase bets on future Bank of England (BoE) interest rate cuts.

Average rates on fixed-rate mortgage products have fallen by more than 0.5 percentage points since peaking in July, Moneyfacts data shows, even before the BoE starts to reduce the benchmark rate that underpins borrowing costs.

The latest inflation data on Wednesday showed price rises in Britain fell faster than expected in October, plunging to 4.6% from 6.7% the prior month, leading to further investor bets on BoE rate cuts next year.

HSBC became the latest lender to cut rates on Wednesday, by an average of 0.15 percentage points across its products, following similar moves by rivals Halifax, Virgin Money and Nationwide in recent days.

Mortgage brokers have seen a series of lenders reduce rates in the last few weeks to catch up with the overall shift in market-pricing on future rates, a spokesperson for broker John Charcol told Reuters.

The average two-year fixed rate mortgage was priced at 6.19% as of Wednesday, the Moneyfacts data showed, down from a peak this year of 6.86% on 26 July. The average five-year rate was 5.79%, down from a peak of 6.37% on Aug. 2.

Some bank mortgage teams are also stepping up activity late in the year to try to meet year-end company targets, with many likely to be behind after a slump for the wider market, a consultant who advises lenders said, declining to be named because he was not authorised to speak on the issue.

While rate reductions will provide some relief to borrowers looking for new mortgage deals, the outlook for Britain’s housing market remains tough. The country’s inflation rate also remains high relative to most other developed economies.

Separate data on Wednesday showed UK house prices fell in annual terms in September for the first time since 2012, underlining the weak state of the property market.

Lender cuts to fixed mortgage rates are also unlikely to be matched by variable rates that closely track the BoE rate.

(Reporting by Iain Withers; editing by Sinead Cruise and Barbara Lewis)

UK lenders step up mortgage price battle as inflation slows

UK lenders step up mortgage price battle as inflation slows

Frequently Asked Questions about UK lenders step up mortgage price battle as inflation slows