Nationwide, Barclays and Halifax cut mortgage rates despite Bank of England set to raise interest rates this week

Three major high street lenders have cut mortgage rates as more deals below 5 per cent open up for hard-pressed borrowers. Barclays has reduced rates by up to 0.3 per cent, with its cheapest rate now 4.89 per cent. Nationwide will have a lowest rate of 4.89 per cent, when it slashes its deals by up to 0.15 per cent from tomorrow. Its sister bank Virgin Money is also set to cut rates by up to 0.17 per cent. Halifax has trimmed rates by as much as 0.22 per cent and now offers deals as cheap as 4.93 per cent.These headline deals are for buyers with the biggest deposits, and some have other hoops to jump through.However, average mortgage rates are falling slightly across the board following a recent spike due to the re-escalation of the war in Iran, which could push up the cost of food and bills and lead to higher inflation. The average two-year fix is 5.97 per cent and the average five-year fix is 5.99 per cent, according to Moneyfacts. Going down: Several major lenders have cut their mortgage rates this week Five-year rates had broken the 6 per cent barrier earlier this month. This week's cuts come despite the fact the Bank of England is set to increase headline interest rates later from 3.75 per cent to 4 per cent on Thursday this week in a bid to stop inflation going any higher. Normally, mortgage rates rise when the base rate rises and fall when it is falling. However, this widely-expected hike has already been priced in to the rates banks are charging on mortgages to some extent. Banks are also being forced to compete harder for customers, as the housing market remains sluggish and higher rates put people off moving home. House prices rose at their slowest pace since early 2024 this month according to Nationwide.Stephen Perkins, mortgage broker and managing director at Norwich-based Yellow Brick Mortgages, said: 'Barclays cutting rates is good news for borrowers and could encourage competitors to sharpen their pricing too.'Borrowers should not assume mortgage rates automatically follow the base rate in either direction.' What are the top mortgage rates? Barclays is offering a rate of 4.95 per cent with an £899 fee to purchasers with a 40 per cent deposit taking a two-year fix – one of the cheapest deals on the market. Halifax has a rate of 4.93 per cent for the same buyer, though they must pay a £999 fee, be a member of the bank's Loyalty Club and have an energy performance certificate rating of A or B. It comes with £250 cashback. Nationwide has a 4.99 rate for those remortgaging with the biggest deposits, with a £999 fee. This was previously 5.09 per cent. Carlo Pileggi, Nationwide’s head of mortgage products, said that 'current market conditions' had allowed the building society to cut rates across its mortgage range.It has also reduced rates for first-time buyers. Those with a 15 per cent deposit can get a two-year fixed rate with no fee at 5.48 per cent, previously 5.58 per cent. Nicholas Mendes, mortgage technical manager at John Charcol said: 'Sub-5 per cent fixed rates returning is a welcome psychological boost for borrowers.'These deals are mainly for people with at least a 40 per cent deposit or equity, and some come with conditions such as being an existing customer or having an energy-efficient property. 'For first-time buyers and those with smaller deposits, rates are still above 5 per cent.'He adds: 'The headline rate isn’t the whole story. Some of the cheapest deals carry fees of up to £1,499, so borrowers with smaller loans may be better off with a slightly higher rate and a lower fee.'On five-year fixes, Nationwide has a rate of 4.89 per cent for new and existing customers moving home with a 40 per cent deposit. They'll need to pay a large £1.499 fee, however. This rate was previously 5.01 per cent. Barclays now offers a 4.89 per cent rate with an £899 fee to those buying with a 40 per cent deposit, though this is on its Green Home mortgage for those buying new builds with top energy efficiency ratings. For buyers of standard homes, the bank has a 4.99 per cent five-year fixed rate with an £899 fee. Santander has a 4.91 per cent rate with a £1,499 fee and £250 cashback for those with 40 per cent deposits, while Halifax offers 4.93 per cent to those in its Loyalty Club with a £999 fee. HSBC offers a 4.93 per cent rate but only to Premier account holders. There are no deals below 5 per cent for those with a 25 per cent deposit or lower among mainstream lenders. How to find a new mortgage Mortgage rates have jumped as conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage