Brokers have welcomed the changes, saying it means competition has returned to the mortgage market, which has been grappling with higher prices since the outbreak of the conflict in the Middle East.
But borrowers are also being warned to make the most of the price cuts and act sooner rather than later if they need finance for remortgages or home purchases.
It was Nationwide and Barclays which last week kicked off the price cutting by announcing a raft of lower rates on Friday. Barclays has today made further price cuts which will come into effect tomorrow (Thursday 2 July).
But, it’s not just a private war between the two lenders – Virgin Money and Coventry Building Society revealed on Monday they were lowering prices for a number of mortgages.
Then, Santander joined the trend announcing on Tuesday rate reductions, with cuts of up to 0.21% for first-time buyers.
What’s the average mortgage rate this week?
These rate reductions mean a typical two-year fixed rate mortgage is now 5.52% which is down from 5.54% on Monday last week.
For a five year fixed rate, the typical interest rates is 5.52% which is also lower than the 5.56% recorded on Monday 22 June.
But whilst it’s good news rates are falling for consumers taking out new deals, there are warnings this trend may not last.
Aaron Strutt, product and communications director for Trinity Financial, said: “These changes are definitely bringing more competition back which is good news and it may well be linked to the war in Iran hopefully stopping and a reduction in funding costs.”
But he warned, there may be uncertainty ahead. He added: “There is always a risk that a new Prime Minister or change of political direction pushes up mortgage costs, and if the market start to get worried about Andy Burnham then fixes could get more expensive again, but for the moment rates are coming down almost on a daily basis.”
There have been concerns the Bank of England may push up interest rates too, which could influence tracker and variable mortgages.
Indeed, many experts think even with the downward tweaks in pricing we have seen this week, it’s not enough to make a huge difference to people’s repayments.
Ian Futcher, financial planner at Quilter, said: “While significant falls in mortgage rates are unlikely to materialise for some time yet, competition between lenders could create some opportunities.
“For buyers and homeowners approaching a remortgage, reviewing 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 are in the process of taking out a mortgage there is still time to take advantage of these new lower rates.
Tracey Dixon, owner at Cardiff-based Pure Mortgage and Protection, speaking to the Newspage agency said: “The biggest message is that rates are changing quickly, so anyone with a mortgage offer in place or whose current deal is ending soon should review their options.
“I’ve already been able to secure lower rates for clients before completion simply because we’ve kept a close eye on lender pricing. If competition continues, borrowers can hopefully expect more choice over the coming months.”