Beleaguered homeowners, battered by months of soaring mortgage costs, could finally be catching a break – as a dramatic fall in market rates paves the way for fixed deals starting with a long-forgotten “3”.
Experts say this week could mark the start of a home loan war, with lenders poised to slash prices on fixed-rate mortgages.
If the dominoes start to fall, some borrowers may soon lock in 2- and 3-year deals below the symbolic 4% mark – rates not seen since the mortgage mayhem kicked off in the aftermath of Trussonomics.
In a bizarre twist, it’s chaos across the pond that may be fuelling hope here. President Donald Trump’s recent “Liberation Day” declaration has sent tremors through global markets – and in the UK, the result has been a steep drop in SONIA swap rates, which are used to price fixed mortgages.
“Since Trump’s Liberation Day speech, swap rates have gone south – and sharply,” said Daniel Hobbs, boss of New Leaf Distribution. “Cuts from major lenders may be on the cards if this continues.”
Pete Mugleston, MD of Online Mortgage Advisor, believes we’re “getting closer to seeing 2- and 3-year fixed rates starting with a 3”. But he warns lenders are waiting for sustained calm in the markets before making bold moves.
He told Newspage: “Once one makes the move, others will likely follow quickly – so borrowers should be ready to act fast when the tipping point arrives.”
The silver lining comes amid a backdrop of falling house prices and consumer anxiety. The Halifax reported a drop in March, sparking concern about a “Trump slump” in the housing market. But lower rates could reverse the tide, according to mortgage adviser Michelle Lawson.
“Lower interest rates resulting from the Trump tornado could be just the news borrowers in the UK have been waiting for to really ignite the mortgage market,” she said.
Katy Eatenton at Lifetime Wealth Management agrees, saying swap rates are “on the slide – and then some”, adding: “Markets are betting on a rate cut at next month’s MPC meeting. Trump has unleashed chaos but borrowers look set to benefit.”
Still, experts warn that while expectations are high, caution rules the day. Lenders have been burnt before – pricing too optimistically only to be sideswiped by sudden market U-turns.
But for millions facing the end of fixed deals this year, the prospect of securing a mortgage below 4% could be game-changing.
As Riz Malik of R3 Wealth puts it: “It will take a brave lender to make the first big move on rates – but once one does, others may quickly follow.”
All eyes are now on the banks. If swaps keep sliding and markets stay calm(ish), the next few days could herald the beginning of a borrowing bonanza.
And after a year of doom and gloom, that really would be a silver lining worth shouting about.
