Lenders have continued to cut mortgage rates this week with TSB and Coventry Building Society amongst those announcing price cuts.
Brokers have said there are now some ‘good options’ for borrowers looking to fix into a new mortgage rate, with several lenders now offering rates of below 4%.
TSB has also become the latest to add products to the ‘sub-4%’ market with its two-year fixed deal for existing customers. However, like many of these lower rate mortgages, it comes with a high fee of £1,495.
These latest price cuts mean the average two-year fixed rate mortgage is now 5.37% which compares to 5.40% on Wednesday last week, according to Moneyfacts.
A typical five-year fix, meanwhile, is at 5.21% having fallen from 5.23% this time last week, Moneyfacts data shows.
Falling rates means anyone who is exiting a two-year fixed rate will most likely be moving to a lower interest deal. This is because mortgage prices hit their peak in 2023.
However, those who are moving from five-year deals, which would have been secured before the price rises and when interest rates were low, will be bracing themselves for higher repayments.
Hannah Bashford, director at Model Financial Solutions, speaking via the Newspage agency, said: “Mortgage rate reductions are more than welcome at present with so much economic uncertainty. Borrowers coming off two-year fixed rates, hoping to see a reduction, look set to benefit.
“The ongoing rate cuts will also soften the blow for those still lucky enough to be on low rates from five years ago. We await the Bank of England rate decision later this month.”
But Sean Horton, owner at Respect Mortgages, also speaking to Newspage, thinks more cuts could be on the cards. However, he urged borrowers to be wary of very low rates.
“The rate cuts should continue,” he said, “with markets pricing in more Bank of England base rate reductions in 2025.
“However, we may need patience before the next move by [the Bank of England] given that inflation has edged up.
“Most buyers rushing to beat the April Stamp Duty changes will have already sorted their mortgages by now. The savvy ones, at least.
“For everyone else, today’s competitive environment still offers good options. Remember to check the total cost of any deal. Those headline-grabbing rates often come with chunky fees attached so borrower beware.”
