Multiple mortgage lenders including the likes of Santander and TSB are lowering rates again as price cuts continue.
From today, Santander is cutting fixed rates by up to 0.14 percentage points and is reducing tracker rates by 0.15 percentage points.
TSB has announced cuts to residential and buy-to-let mortgages of up to 0.2 percentage points. Virgin Money and Clydesdale Bank reduced their standard variable rates by 0.25 points last week with Virgin also launching limited-edition special rates that will be available until Monday 22 July.
Small lender MPowered Mortgages is also cutting rates for the second time in a week, having reduced them as recently as last Thursday. It cut two-year fixed rates by up to 0.15 percentage points last week and reduced them by a further 0.3 points today.
Meanwhile, Yorkshire Building Society is reducing rates by up to 0.25 percentage points – its second cut in two weeks.
The reductions follow weeks of downward pricing by lenders ahead of a possible Bank of England interest rate cut next month.
Rates are slowly falling across the board. Two weeks ago, the average two-year fixed mortgage was 5.97 per cent, and the average five-year fixed mortgage was 5.53 per cent.
But now, after numerous cuts including from major lenders like Halifax, Nationwide and more, the averages are 5.91 per cent and 5.49 per cent, according to Moneyfacts.
Experts expect that rates may continue to fall, with brokers predicting rates of below 4 per cent for those with the biggest deposits or equity could be a possibility within weeks.
Aaron Strutt of brokers Trinity Financial said: “More lenders are lowering their rates at the moment to undercut their competitors. This is good news for borrowers planning to get on the property ladder soon or remortgaging homeowners keen to minimising the payment shock.”
However, the speed of rate cuts could depend on whether inflation falls as expected on Wednesday.
Elliott Culley of Switch Mortgage Finance told i: “If inflation data was better than expected this could accelerate rate drops and cement a Bank of England base rate reduction in August.
“At the moment, there is worry inflation could rise again in the winter, so I would imagine banks will air on the side of caution when it comes to reducing the rates, as they won’t want to overdo it and then have to backtrack and put rates back up.”
“It is certainly not nailed on that the Bank of England will reduce the base rate, and most see this as a 50:50 decision. If it was held I could imagine rates will start to plateau, it will depend on what is said by [Bank of England Governor] Andrew Bailey when explaining the decision,” he added.
Other experts believe the base rate decision is having little impact on whether lenders are deciding to cut rates.
Jane King, a mortgage broker at Ash Ridge, said: “Although bank rates have stayed the same for several months, fixed rates have been fluctuating up and down for some time – this is partly due to a lack of new business which is forcing them to become more competitive. I think this goes to demonstrate that at the moment fixed rates are not being dictated by [the] bank base [rate].”
Mortgage rates broadly follow swap rates – which are based on long-term predictions of what will happen to the Bank of England base rate – but they can also be influenced by banks’ desire to attract business if more people are looking to buy homes.
The Bank of England base rate is set to fall in 2024, likely in either August or September.
But higher than expected inflation data between now and then could push back the likelihood of a rate cut in the near future, which might see mortgage rates rise again.