Despite some providers increasing rates, more are making cuts ahead of the Bank of England’s base rate decision on Thursday
Three lenders, including Barclays, are cutting their mortgage rates this week.
It comes ahead of an expected fall to the base rate when the Bank of England’s Monetary Policy Committee (MPC) meet on Thursday.
Barclays has announced it will reduce two-year fixed rates for those with 40 per cent deposit or equity from 4.43 per cent to 4.38 per cent as of tomorrow.
Its five-year fixed rate will drop from 4.42 per cent to 4.36 per cent. This is for those with 25 per cent deposit or equity.
Meanwhile, Accord is reducing selected fixed rates by up to 0.10 percentage points tomorrow while Coventry Building Society has cut all fixed rates by up to 0.27 percentage points today.
Santander, TSB and Co-Op have also all cut rates in the past week.
This will spark good news for homeowners and first-time buyers who have seen both some increases and some reductions in rates over the past few weeks.
Fluctuations have been a result of increasing swap rates – a reflection of market expectations for the future interest rates set by the Bank of England – which impact mortgage rates.
Whilst some have been going down slowly, more lenders have now decided to start moving in a downwards direction.
It comes as the Bank is predicted to cut rates from 4.75 per cent to 4.5 per cent.
Those on tracker and standard variable mortgages, which tend to follow the base rate, will come down automatically in response to any cut.
However, those on fixed rates, which are typically cheaper, will have to wait for their deal to end before renewing on to another rate.
But experts suggest this could be the start of a trend of mortgage rates coming down over the next couple of weeks.
Aaron Strutt of brokers Trinity Financial said: “We could see more rate reductions soon, especially if the Bank of England base rate comes down. It should be an interesting week.”
However, some warn the changes have, so far, been minimal.
Justin Moy of EHF Mortgages said: “The rate cuts are waiver thin for most lenders, some less than 0.05 per cent, so whilst the sentiment is positive, the cuts are very small.”
Mark Harris, chief executive of brokers SPF Private Clients, said more products have come down the last week, rather than up.
He said: “While Swap rates, which underpin the pricing of fixed-rate mortgages, have been pretty volatile in recent months, the trend has been largely downwards from their peak around Christmas.
“Lenders have reduced mortgage rates accordingly but some have also raised rates, depending on appetite to do business and reliance on Swap rates for funding.
“The ‘big six’ lenders do the bulk of lending but are more sensitive to pricing, particularly among their peers, and keen not to be overly competitive, which may impact service levels.
“Smaller lenders, on the other hand, tend to dip in and out a little bit more, offering the cheapest best buy rates but then pulling them quickly to avoid over exposure.”
For anyone nearing the end of a fixed-rate term or considering a new mortgage deal, brokers say it is vital to act quickly.
Consulting a mortgage broker is highly recommended, as they can provide tailored advice and access a wider range of products than those available directly to consumers. Brokers can also help borrowers decide whether to secure a rate now and move onto a new rate should the market improve.
Securing a fixed rate now, even if rates feel high compared to previous years, could offer valuable protection against potential further increases in the coming months.