High Street Lenders Cut Mortgage Rates
Following hints from the Bank of England of a potential Base Rate cut at the next review*, many high street lenders have cut mortgage rates. This has led to the media talking about a “mortgage war”** as the banks fight to compete for your business. Adam Nanson talks about how your mortgage will be impacted.
“Earlier this month, the Bank of England Governor in an interview said that they could be more aggressive with rate cuts if inflation remains stable*. As a result, two year and five year swap rates have fallen*** with many of the major high street lenders pricing their mortgage rates down accordingly.
“Figures show that since July, the lowest five-year fixed rate has fallen from 4.28% to 3.69%. And the lowest two-year fix has dropped from 4.68% to 3.89%.”
What does this mean for my mortgage?
“This is great news if you are looking to remortgage your current property or get a mortgage on a new one.
“There’s not been much good news for mortgage borrowers over the last two years. So it’s great news that rates are coming down.
“I do add a note of caution as none of us have a crystal ball to predict the future. Andrew Bailey has warned of a potential shock to the markets if the situation in the Middle East should escalate. So, just because deals are coming down now, we don’t know if this is a long term trend.
“With most deals, you can lock in a new rate within 6 months of your current deal coming to an end. So we would recommend clients to lock in a new deal now while rates are low. And, if lenders continue to drop their rates, we can switch deals as many times as we need to before your deal expires.”
What do I do if I’m in the middle of my mortgage term?
“If you’re on a flexible mortgage product such as a tracker or a variable rate mortgage it might be possible for you to switch to a new deal.
“However, most fixed term mortgage deals will want to lock you in for the duration of your mortgage term. This means that – if you want to sign up to a new deal midterm – you will generally have to pay an early repayment charge (ERCs) in order to exit your deal.
“By speaking to a mortgage broker like us, we can look at whether you can change deals now and if you will need to pay any ERCs. We can help you strike the balance between how much you might pay to exit your deal and the savings you can make from swapping to a lower rate than the one you are currently on.”
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**Source: https://propertyindustryeye.com/mortgage-rate-war-heats-up-as-major-lenders-cut-rates-again/
***Source : https://www.mortgagesolutions.co.uk/news/2024/10/03/mortgage-rate-war-begins-as-swaps-fall/