Rate Reductions Continue
Continued reductions in swap rates have further lowered lenders’ fixed-rate mortgage products. With increasing competition, lenders may continue cutting rates to undercut rivals and attract more customers. This decline in mortgage rates has not only heightened competition but also improved affordability for borrowers.
As competitive pressures drive borrowing costs down, consumers benefit from cheaper mortgage deals, making loans more affordable. This increased affordability stimulates demand for mortgages, intensifying competition and lowering lending rates. While this environment benefits consumers, it creates a highly competitive, low-margin situation for lenders.
Additionally, this competition has fueled housing market activity, with the average house price reaching £266,400 in July – a 1.4% increase since the start of the year. House prices are projected to rise by 2.5% by the end of 2024.
Bank Of England Meet 19th September
Autumn Budget 30th October 2024
At their meeting next Thursday, the Bank of England’s Monetary Policy Committee (MPC) is likely to closely monitor mortgage lending trends and the impact of rate cuts on both the housing market and inflation. Given these considerations, the committee may adopt a cautious approach to interest rate decisions, waiting for more evident economic indicators before making any changes.
In the upcoming October budget, the government may view the increased affordability of mortgages and heightened housing market activity as a positive for consumer confidence and economic growth. This could lead to further support for homeownership initiatives or targeted housing policies to maintain affordability.
Swap Rates Fall Below 4%
13th September Swaps
1st August Swaps
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