Brokers predict that the lowest mortgage rates could fall below 4% by the end of this year.
Recent rate cuts are providing relief for UK borrowers, with the market gearing up for a potential reduction in interest rates by the Bank of England later this summer. This anticipated move is expected to further influence mortgage rates.
In response to the shifting market conditions, Halifax has reduced rates on a range of mortgage products for the second week in a row. They join other lenders such as Santander, TSB, Virgin Money, and the Cooperative Bank, all of which have also lowered borrowing rates in recent weeks.
Barclays, which began the current round of rate cuts last month, now offers competitive rates with five-year fixed mortgages available from 4.08% and two-year fixed deals starting at 4.49% for some customers. This ongoing trend of rate adjustments reflects a broader effort by lenders to attract borrowers in a dynamic and competitive market.
Brokers predict that mortgage rates could soon fall below 4%, a level that may draw in additional borrowers.
Aaron Strutt, a director at Trinity Financial, explained, “The anticipated wave of rate cuts appears to be accelerating. We have observed that most major lenders have reduced their rates over the past few weeks, with some cuts being notably substantial.”
This trend of lowering mortgage rates coincides with market speculation that the Bank of England is likely to lower interest rates in August or September. The current base rate stands at a 16-year high of 5.25%, and a reduction could further influence mortgage rates, making borrowing more affordable for many.
June’s inflation data, released on Wednesday, indicated that annual price increases remained steady at 2%, which matches the central bank’s target level.
Matt Smith, mortgage analyst at Rightmove, noted, “With the anticipated base rate cut approaching, the stability in the economy is precisely what is needed to maintain our current plans. As we move closer to this rate change, we expect to see mortgage rates continue to decline as lenders compete more aggressively for business.”
In addition, the five-year Sonia swap rate, a key benchmark used by UK lenders to price loans, has decreased to 3.8% from 3.91% a month ago. This drop in the swap rate reflects the ongoing adjustments in the financial markets and further influences mortgage pricing.
Further reductions in the cost of loans offer positive prospects for the property market, which has struggled to gain traction since interest rates surged in late 2022.
Simon Gammon, managing partner at Knight Frank Finance, indicated that if current trends continue, mortgage rates could potentially fall below 4% within the year. Such a decrease could act as a catalyst for many buyers and investors to proceed with purchases and consider new fixed-rate mortgages. Gammon observed that “a rate starting with a three feels more acceptable,” suggesting that this threshold might make a significant difference in market activity.
Despite these hopeful signs, there are concerns that high interest rates could still pose challenges for the new Labour government’s objective to stimulate a boom in home building. The elevated rates may continue to impact buyer affordability, leading commercial builders to scale back their construction activities based on the reduced rate of sales. This situation could potentially hinder the government’s efforts to increase housing supply and rejuvenate the market.
Further reductions in the cost of loans offer positive prospects for the property market, which has struggled to gain traction since interest rates surged in late 2022.
Simon Gammon, managing partner at Knight Frank Finance, indicated that if current trends continue, mortgage rates could potentially fall below 4% within the year. Such a decrease could act as a catalyst for many buyers and investors to proceed with purchases and consider new fixed-rate mortgages. Gammon observed that “a rate starting with a three feels more acceptable,” suggesting that this threshold might make a significant difference in market activity.
Despite these hopeful signs, there are concerns that high interest rates could still pose challenges for the new Labour government’s objective to stimulate a boom in home building. The elevated rates may continue to impact buyer affordability, leading commercial builders to scale back their construction activities based on the reduced rate of sales. This situation could potentially hinder the government’s efforts to increase housing supply and rejuvenate the market.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property