TSB follows NatWest in cutting rates: "lenders believe cuts to the base rate are still on the horizon"

Further rate cuts just shows the potential for a scramble within high street lenders over the summer, as they look to grab business with finer margins. Though they may be slightly less imminent, lenders believe cuts to the base rate are still on the horizon. This shows that pricing is not all about the cost of funds. Lenders will also use pricing to manage workloads and may be in a better position to take volume over the coming months.

TSB, like NatWest, don't appear to have got the memo from the markets, which see the chances of a rate cut in August diminishing. Equally, it may just be that lenders are trying to ignite the property market, which has been a little slower over the summer thanks to the General Election. Demand has definitely increased in July to date and lenders are clearly angling for more market share.

TSB and NatWest follow several other lenders by reducing their fixed rates. Market trends continue downward even after the inflation news yesterday and the chance of an August base rate cut diminishing. SWAP rates are still lower than what they were a month ago so the hope would be that we see further reductions.

Whilst TSB & NatWest Bank's latest rate reductions aren't game-changing for mortgage seekers, in an increasingly competitive market, every move matters, and these rate cuts keep them firmly in the race for the top spot. Mortgage rate reductions across the board like this will save countless individuals money and fuel healthy competition between lenders.

As families face the imminent challenge of entertaining kids for six consecutive weeks, borrowers reducing and slightly cheaper mortgages will help to lift spirits in the household. The money saved can go towards wine to help them as they battle through the school holidays.

A second reduction from TSB in the space of a week is unusual but very welcome. It shows lenders starting to compete for new business and this can only ever be a good thing for borrowers. However, with yesterday's inflation figures and today's wage growth numbers, there are some grey clouds on the horizon.