The Bank of England is due make its next decision on interest rates this Thursday, 6 February, and indications suggest they will go ahead and make a 0.25% cut to bring the base rate down to 4.5%.
To further cement this forecast, Coventry Building Society announced it was reducing all owner occupier fixed mortgage rates by up to 0.27% and lowering buy-to-let prices by up to 0.20%.
Meanwhile, Barclays has cut rates on its purchase and remortgage products and introduced new deals. Whilst Accord Mortgages, which is a subsidiary of Yorkshire Building Society and offers it mortgages via brokers only, also announced rate reductions.
According to Laith Khalaf, head of investment analysis at AJ Bell, there is a good chance of a base rate cut on Thursday when the central bank’s nine-member Monetary Policy Committee (MPC) meets to make the decision.
“Economic signals have been weak and services inflation has fallen back substantially since the last meeting of the MPC in December,” he said, “at which point three members of the committee already voted for a cut to 4.5%.”
“The market is currently pricing in a 90% chance of a rate cut and that feels about right. There’s the possibility of a surprise, but a small one.”
Mortgage brokers are also optimistic the pricing cuts made by lenders in the lead up to the decision, and following a period of price hikes, is a positive sign for borrowers.
David Stirling, director at Mint Mortgages & Protection speaking yesterday to the Newspage Agency said: “With the odds of a rate cut on Thursday being slashed this morning and now looking a nailed-on certainty, Barclays have placed their bets quickly by reducing their mortgage rates in the hope of increased market share.
“The rate war we all anticipated starting in January never came to fruition, but smaller lenders Coventry and Accord both reduced this morning, so competition could potentially heat up.”
And Katy Eatenton, mortgage & protection Specialist at Lifetime Wealth Management also speaking to Newspage, said the rate cuts were ‘confidence boosting’. “With the Bank of England expected to cut rates this week, and more cuts likely this year, this may be the start of a brighter spell for borrowers. Let’s hope February delivers the cuts January did not.”
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