Mortgage rates have fallen to a two year low – offering a “fantastic” opportunity to home buyers, say experts.
Just today, Halifax and The Mortgage Works(TMW) joined rivals, including Nationwide and Barclays, in cutting rates with the result it is possible to get a five year fix for around 3.7 percent.
At the same time, a number of lenders are introducing a raft of mega mortgages that will allow first-time buyers to borrow up to six times their salary with a maximum loan running to an eye-watering £750,000.
Mortgage brokers argue now is the “perfect time” to lock in a mortgage as rates because there is a risk that further cuts could be put at risk if Labour’s Budget announcement proves to be inflationary.
However, this is far from guaranteed, and some City banks expect a positive outlook for the economy and some steep falls in interest rates over the next 12 months.
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said: “Lenders are trying to fill their boots before the autumn Budget potentially puts a giant hole in them. Now is a great time for borrowers to grab a deal with rate reductions across the board.”
Chris Sykes, mortgage broker at Private Finance, said he was “surprised” how low rates had fallen and that banks’ profit margins on the best deals would be “wafer thin”.
He added: “It’s great news for borrowers. A lot of lenders haven’t hit targets this year and are now keen to compete on price to secure their market share.
“There’s some uncertainty over the October budget and whether it will be inflationary.
“It means we could be in a fantastic window to lock in rates in the next few weeks. Now is the perfect time if you’re remortgaging or purchasing.”
Kim McGinley, Director & Specialist Broker at VIBE Finance, told Newspage: “The recent rate cuts are a welcome sign for the mortgage market as lenders continue to compete for business.
“Any reduction in rates is always encouraging, offering borrowers better opportunities and increased affordability. It’s great to see the market adapting and responding to demand, and this ongoing trend of rate reductions can only be a positive development for those looking to secure their next property.”
Iain Swatton, Director at Exemplar Financial Services, said: “With Halifax, TMW, and a host of other lenders dropping their rates in quick succession, it feels like we’re in the middle of a real price war.
“Despite the Bank of England holding the base rate steady, there’s growing hope that we’ll see a cut at the next review. For now, this rate-cutting trend shows lenders are determined to grab market share, making it an exciting time for anyone looking to buy or remortgage.
“Whatever the reason behind the reductions, the bottom line is that it’s great news for consumers with more options, better deals, and a more competitive market.”
Tony Castle, Managing Director at PFG Mortgages, said: “The mortgage market is mirroring the weather: it’s raining rate cuts this week. Halifax certainly have the momentum with yet more rate cuts this week. More mortgage rates starting with a 3 is another welcome sight for first-time buyers and homeowners.”
Justin Moy, Managing Director at EHF Mortgages, said: “Homeowners and first-time buyers will benefit the most from Halifax’s repricing. However, for landlords this is also a great time to be refinancing and finding some bargain properties to invest in. These rate cuts are perfect timing for that.”
Ranald Mitchell, Director at Charwin Mortgages, said: “It’s an exciting time for homeowners and buyers, with Halifax the latest lender to decrease rates futher.
“ It seems like cheaper borrowing is returning as lenders relentlessly cut mortgage rates, vying for the top spot to get mortgage money moving. The rate reductions are showing little sign of letting up, meaning it’s a party in the pockets of many borrowers.”
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, said the cheaper home loans are driven by falls in so-called swap rates, which relate to the interest rates charged by financial institutions to lend to each other.
He added: “These widespread reductions are not merely a response to current market conditions but also a strategic play from lenders anticipating further rate cuts.
“Recent trends show a consistent decline in swap rates over the past few months, driven by improved economic conditions and decreasing inflation expectations. The lending pendulum may have finally swung, with falling rates acting as a wrecking ball to the walls of unaffordability for budding homeowners.”
