NatWest is now offering a 3.97pc deal for a five-year fix, edging out Nationwide Building Society’s 3.99pc deal as the lowest rate on the market. Although, the NatWest deal is only available for home purchasers with a 40pc deposit. Borrowers must approach the bank directly and cannot use a broker.
Rachel Springall, of analyst Moneyfacts, said there was still “much room for improvement” in the mortgage market. She added that the appearance of deals below 4pc would encourage other lenders to follow suit.
She said: ”Borrowers sitting on the fence may remain patient for a little while longer. However, on the flip side, those who feel this might now be their chance could see if they can lock into a deal early, as some lenders will let borrowers do this from three to six months in advance.”
Nick Mendes, mortgage adviser at John Charcol, said rates offered by lenders could dip to as low as 3.5pc for five-year fixes.
He added: “Markets always react on expectations and forecasts – if we do see a Fed cut naturally that will play into the narrative that the Bank of England will cut rates twice before the end of the year rather than once.”
Economists at Capital Economics have previously predicted the Bank of England will proceed with caution – but the firm still expects the base rate to fall to 3pc by the end of 2025.
Property adviser Adrian Anderson said the shocks in Wall Street could lead to faster rate cuts than predicted.
He said: “This week I am a bit more bullish now rates will come down quicker, off the back of what’s happening.
“Rate cuts in the US will be positive news for borrowers here. This sub-4pc fix-rate pricing is quite an important psychological barrier for people.
“If we start coming out with more rates that start with a three that’s going to be positive for consumer confidence and people looking to purchase.”