Brokers have welcomed the changes, saying it means a return of competition to the mortgage market, which has been suffering from rising prices since the outbreak of conflict in the Middle East.
But borrowers are also being warned to make the most of rate cuts and act sooner rather than later if they need financing to remortgage or buy homes.
It was the banks “Nationwide” and “Barclays” that began cutting rates last week by announcing a large set of lower interest rates on Friday. Barclays today made further rate cuts which will come into effect tomorrow (Thursday 2 July).
But it’s not just a private war between lenders – Virgin Money and Coventry Building Society revealed on Monday they have cut rates on a number of mortgages.
Santander then joined the trend by announcing rate cuts on Tuesday, with cuts of up to 0.21% for first-time buyers.
What is the average mortgage rate this week?
These rate cuts mean the typical two-year mortgage rate is now 5.52% which is down from 5.54% on Monday last week.
For a five-year fixed rate, typical interest rates are 5.52% which is also lower than the 5.56% recorded on Monday, June 22.
But while the good news rates are falling for consumers closing new deals, there are warnings that this trend may not continue.
“These changes are definitely bringing back more competition, which is good news and may be linked to the war in Iran which we hope will stop and lower funding costs,” said Aaron Strout, director of products and communications at Trinity Financial.
But he warned that there could be uncertainty ahead. He added: “There is always a risk that the appointment of a new Prime Minister or a change in political direction will raise mortgage costs, and if the market starts to worry about Andy Burnham, repairs could become more expensive again, but at the moment interest rates are falling on an almost daily basis.”
There have been concerns that the Bank of England may also raise interest rates, which could affect tracker and variable mortgages.
In fact, many experts believe that even with the downward rate adjustments we saw this week, that’s not enough to make much of a difference in people’s payments.
Ian Futscher, a financial planner at Quilter, said: “Although significant declines in mortgage rates are unlikely to materialize for some time yet, competition between lenders could create some opportunities.
“For buyers and homeowners approaching remortgaging, reviewing your options and seeking advice early will help put you in a stronger position as the market continues to adjust.”
What to do if you have a live mortgage offer
If you’re in the process of getting a mortgage, there’s still time to take advantage of these new lower rates.
Tracy Dixon, owner of… Pure Mortgage and Protection in CardiffSpeaking to Newspage, he said: “The biggest message is that rates are changing rapidly, so anyone who has a mortgage offer or whose current deal is expiring soon should review their options.
“We have already been able to secure lower interest rates for customers before closing simply because we closely monitor lender rates. If competition continues, we hope borrowers will expect more options over the coming months.”
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