Should borrowers secure a deal now? Experts weigh in
The lowest five-year fixed mortgage rate at 60% loan-to-value has dropped below 4% for the first time since April 2024, according to price comparison site Moneyfactscompare.co.uk.
“Fixed mortgage rates are on the downward trend, which will be a relief to borrowers looking to refinance,” said Rachel Springall (pictured left), finance expert at Moneyfactscompare. “There is still much more room for improvement, but it has taken a few months for the lowest fixed mortgage rates to drop below the 4% mark.”
She noted that five-year fixed mortgages are currently lower than two-year equivalents, advising uncertain borrowers to seek guidance on their options.
“Since the start of 2024, mortgage rates have been volatile, and in the past few weeks, lenders have been reacting to changing swap rates,” Springall said. “Mortgage rates could fall further, but it is difficult to tell how quickly and by what margins.
“Typically, a brand with a large presence in the market that cuts rates can encourage other lenders to review their rates to compete, so as the lowest five-year rates have edged closer to 4% from some of the biggest high street brands, the market did appear on course to reveal a sub-4% deal.”
Ben Thompson (pictured right), deputy chief executive at mortgage intermediary brand and specialist network Mortgage Advice Bureau, said fixed rate mortgages under 4% are definitely back on the market.
“The reality is that lenders have already priced in that all-important first rate cut, whether it comes in August or September,” he said. “While we might see a few ups and downs depending on timings, there are good rates on the market for prospective buyers and remortgagers. Now is the time to get mortgage ready, speak to a broker, and see what your options are.”
Springall suggested that borrowers hesitant to commit might remain patient a bit longer, while those eager to secure a deal might consider locking in rates early, as some lenders allow this three to six months in advance.
“Those waiting for the Bank of England to cut base rate may be crossing their fingers for August, but this has split opinions among economists who are now pointing towards September at the earliest due to stubborn service inflation,” she said.
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