Higher mortgage rates are 'new normal', homeowners warned

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Banks admit no silver bullet exists for soaring bills despite recent cuts.

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11 Aug 2023

Borrowers should expect a “new normal” of high mortgage rates above 4pc, as bank chiefs warn there is no “silver bullet” for rising bills.

Major mortgage lenders including HSBC, TSB and NatWest reduced their rates this week offering some hope to homeowners facing a financial shock when they come to the end of their current fixed-term loan.

NatWest has announced cuts of up to 0.65pc across its home loan products for new customers effective from August 11.

However, borrowers have been warned not to hold out for significant changes to rates in the coming months as the Bank of England is expected to continue increasing its base rate in a bid to bring down inflation.

James Tatch, head of analytics at banking trade body UK Finance, said: ‘‘We have a very competitive mortgage market so it is not a price war, it is lenders pricing as keenly as they can close to the swap rates.

“In the short term I would expect that repricing to continue. Mortgage rates, particularly two-year