Mortgage rates in the UK are expected to drop below 4% by next summer, potentially saving the average homeowner £700 per year, according to a report by iNews.
Several brokers have expressed optimism that lenders will significantly cut their rates to attract more customers, especially in a sluggish housing market.
Homeowners looking to re-mortgage or enter the property market are hopeful that the era of rising interest rates may be coming to an end. This optimism is reinforced by the anticipation that even if the Bank of England's base interest rate remains unchanged at 5.25%, mortgage rates are likely to decrease to attract buyers.
Nick Mendes, a mortgage technical manager at John Charcol Brokers, is optimistic that five-year fixed rates could fall below 4% by the summer of the following year, regardless of base interest rate adjustments. Ranald Mitchell, director at Charwin Private Clients mortgage brokers, also sees the possibility of sub-4% rates by 2024.
The current best five-year fixed rate is offered by Santander at 4.74%. If this rate falls to 4%, homeowners with a £200,000 loan and a 25% deposit could save £744 annually.
However, it's worth noting that factors like inflation and international conflicts could influence this trend. While some experts are cautiously optimistic, others believe it might be challenging to see sub-4% mortgage rates become commonplace. Nevertheless, the mortgage market is competitive, and lenders are taking steps to stimulate it.
With recent declines in new home loan applications and weaker property market conditions, lenders are under pressure to lower mortgage rates. The government emphasises the importance of fiscal discipline to combat inflation and avoid further interest hikes.
In conclusion, the potential drop in mortgage rates offers hope to homeowners and property buyers, and lenders are likely to adjust their rates to stay competitive in a challenging market. Bridging finance could also see an impact from these changes, as homeowners may consider it as an option while navigating these fluctuations in the property market.