Three of the UK’s biggest lenders have cut their fixed mortgage rates in the past week in anticipation of an interest rate cut in August.

HSBC has followed Barclays and NatWest to become the latest lender to bring down mortgage borrowing n costs, with more are expected to follow.

The bank will cut rates across its residential and buy-to-let loans from today.

On Monday, Barclays announced rate cuts of up to 0.31% property buyers.

The drop has raised hopes that the central bank will make its first cut as early as August and bring down the cost of borrowing, with some analysts suggesting the Bank was unlikely to drop its rate during an election period.

Jeremy Batstone-Carr, european strategist at Raymond James Investment Services, said: “The general election precludes the Bank from making moves that could signify political favour. Once the new Parliament is seated and a new budget is delivered, the trajectory for monetary policy will be made clearer.

“That being said, it is clear that a rate cut is on the horizon and, assuming inflationary pressures remain eased, it is likely there may be more than one.”

The Bank Rate has sat at its current level, a 16-year high, since autumn last year in an ongoing bid to tackle inflation that peaked at 11.1pc in October 2022.

Nicholas Mendes of broker John Charcol, added: “We can anticipate that lenders will escalate their strategies significantly over the next few weeks.

“Following last week’s Monetary Policy Committee decision and with important wage data and general election results on the horizon, markets are likely to anticipate further reductions in bank rates.”

The five-year SONIA swap rate – the main pricing mechanism for five year fixed rate mortgages – currently stands at 3.82% suggesting that there is space for lenders to lower rates from their current levels.

Homebuyers frustrated at frequency of mortgage rate fluctuations