Mortgage rates have continued to fall this week with Halifax, Natwest and now Santander joining other lenders in cutting prices.
Last week Barclays, HSBC and Coventry Building Society reduced their rates in response to improving SWAP rates, which are used by lenders to set their pricing.
Mortgage experts said this is welcome news for borrowers – particularly ahead of the next Bank of England interest rate decision in August.
Ranald Mitchell, director at Charwin Private Clients, speaking via the Newspage agency said: “Rate cuts are always welcome news, and the latest reductions from Halifax and NatWest signal that lenders are sharpening their competitive edges once again. This is excellent news for those seeking mortgages.
“With an anticipated base rate cut in August, the mortgage market is poised for a resurgence. Buyers should act quickly, though: heightened competition will likely drive property prices up, creating a brief window of opportunity for those ready to move now rather than later. Don’t miss out.”
Kellie Steed, mortgage expert at Uswitch, also thought mortgage rate cuts suggested lenders were ‘more confident’ the Bank of England (BoE) would cut rates in August.
Uswitch’s analysis of average mortgage rates showed the average two-year fixed rate deal had reduced over the week from 6.09% down to 5.99%.
Steed said: “While this is a fairly modest decrease, it adds up over the lifetime of a mortgage. For an average-priced house (£264,900) with a 10% deposit and a mortgage term of 25 years, a mortgage payment would be £1,549 per month on a 6.09% mortgage rate. However, this decreases to £1,534 on a 5.99% rate. Over 25 years, this is a saving of £4,500.”
Those considering taking out a five-year fixed rate, according to Uswitch’s figures, will see a small increase, from 5.40% to 5.49%.
Steed said: “While average rates remain above 5% for the time being, a growing number of sub 5% rates are becoming available across the market.
“With NatWest cutting rates for both new and existing customers to as low as 4.34% for certain deals at 60% LTV. However, the BoE reported a 1.3% fall in new mortgage approvals for May, suggesting that rates are not yet allowing buyers to secure a mortgage easily.”
