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NatWest rate cuts: start of the rate war?

Journalist: Newspage News Desk

ended 10. August 2023

From tomorrow (Friday), NatWest is reducing their fixed rates by up to 0.65% on both 2 and 5-year fixed rates. A few of the changes are below.

  • Purchase: Rate reduction of up to 37ps and 65bps on selected 2 and 5-year deals.
  • Remortgage: Rate reduction of up to 45ps and 65bps on selected 2 and 5-year deals.
  • First-time buyer: Rate reduction of up to 37ps and 55bps on selected 90% LTV 2 and 5-year deals.

UK newswire, Newspage, sought the views of brokers, which can be found below.

12 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
This is a sure sign the bigger lenders are falling well short of their lending targets. This is the most obvious lever for them to pull, to gain market share and is fantastic news for the retail mortgage market and mortgage holders. How long will it last and how far will they go? Let the battle commence.
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Craig Fish
Director at Lodestone Mortgages
Another of the big lenders is reducing the prices following what I consider to be an overzealous reaction to the Bank of England's decisions. I firmly believe that most lenders are overpriced, merely to control workloads, while they adopt a 'wait and see what our competitors do' attitude. This has had a negative effect and has resulted in greatly reduced mortgage transactions, while lenders still have lending targets to achieve. These moves are a step in the right direction, towards where rates should have been, but I think the real rate war will commence when we see the inflation data that will be released next week, providing it continues to move in the right direction. Lenders may then be able to get their targets back on track.
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Kylie-Ann Gatecliffe
Director at KAG Financial
The competition is on. It is great to see high street lenders reducing rates, and a rate war is welcomed by us brokers wanting to offer borrowers more appealing products. I suspect others will follow suit and we will hopefully see the lenders yet to reduce also start to reprice.
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Peter Stamford
Mortgage Expert at Stamford Home Finance
A dip in transaction volumes has clearly worried the lenders. The rate war begins. Let's hope this response is not too little, too late.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
With a crash of thunder and a flash of light, some rubbish interest rates flew out of sight. Granted the flurry of hefty rate reductions in mortgage brokers inboxes still equate to higher rates than consumers are used to but it's great news for hard-pressed borrowers. There certainly seems to be a full blown rate war brewing with lenders once again competing for business in what feels like a much calmer and more settled market.
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Riz Malik
Independent Financial Adviser at R3 Wealth
This week is getting better and better. With NatWest now joining the ranks of Halifax and HSBC, those lagging behind will likely reconsider their offerings. This is great news for those currently seeking mortgage financing. August is certainly turning out to be the best month for the mortgage market yet.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
This is tempered good news for borrowers, but we have another inflation print before the next rate decision. Lenders think we may be at the top, but the central bank might have other ideas. If we have reached peak rates, they will settle there for months before coming down.
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Imran Hussain
Director at Harmony Financial Services
This week is the week that keeps on giving with many lenders dropping rates. Long may it continue especially after the continued assault on working families ever since Trussonomics. Hopefully this is the start of a rate war to reduce the cost of borrowing for millions across the country.
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Gary Boakes
Director at Verve Financial
With HSBC and halifax announcing rate reductions this week, it is not a surprise that the rest will follow. Lenders are aware that there is currently less business and looking to make moves to pick up what they can for the rest of the year. Is this a start of a rate war, only time will tell, with lender economists still predicting 5.5 -5.75% base rate by end of the year it will be interesting to see what happens. I suspect the rate reductions are due to the lenders initial panic after the 0.5% base rate rise in June and now realising they never needed to increase as high and quick as they first expected.
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Rob Gill
Managing Director at Altura Mortgage Finance
NatWest are now the fifth major lender this week to announce significant rate cuts, coming off the back of last month's lower than expected inflation figure, and the Bank of England reacting with a relatively modest hike of 0.25% last week. These could be the opening salvos in a full-on 'Back to School' rate war next month as lenders seek to recover from a quiet July and August.
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Joe Garner
Founder & Managing Director at Joe Garner Consulting
The banks are trimming the fat they packed into the last set of knee-jerk, close your eyes and reload rate rises that punctuated the earlier part of the summer. Transactions are down by a third year on year resulting in a rate war to grab as much of the remaining volume as possible. If the squabble for share intensifies and the Bank of England play ball, we could see rates drop into the 4s in the latter part of the year.
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Ben Tadd
Director at Lucra Mortgages
With yet another big lender slashing their rates, the rest of the market will now have to act hastily to catch up, so as not to miss their slice of market share. This latest round of rate reductions will only serve to bring confidence back to the purchase market for those borrowers who had previously paused any plans to buy. Assuming the inflation data remains positive going forwards and rates continue to slide, we could well be looking at fixed rates just below 5% by the end of 2023.