Bank of Ireland reduces rates

This is great news and an early Christmas Present for borrowers. Above all else, what the mortgage market needs is competition between lenders and this kind of move is a positive sign for everyone moving forward. It's always important, of course, for borrowers to be advised based on their own individual circumstances but overall this is positive to see.

Considering that in October the best 5-year fixes were about 1% higher, it's highly encouraging news to see that mortgage rates are falling quite rapidly. What we don't know yet is how much of the anticipated 0.5%-0.75% base rate increase on December 15th will be passed onto consumers. It's possible lenders won't pass on the full amount and the best mortgage rates will remain below 5%. All in all, this is great news for borrowers.

Is this a last gasp attempt for lenders to generate some business for 2022 and start 2023 strong or is this a sign of things to come? Either way, this is ultimately fantastic news and with similar rates coming from Principality and Coventry this week, let's hope this trend continues. All we need is some of the big boys, namely Halifax, NatWest and Nationwide to follow suit and we can go into 2023 with the market looking a lot more encouraging than a month ago. With the market moving this quickly, this is why it is imperative that customers need to engage with a mortgage adviser.

This is further evidence of the reduction in cost of fixed rate money (swap rates) filtering through to the market. It is great to see another high street lender join both Coventry Building Society (4.69%) and Principality Building Society (4.60%) in reducing their rates. Hopefully, this is sign of things to come as lenders look to secure the last pieces of business in 2022 and position themselves for new applications in the new year. The next logical step for lenders is to reduce 2-year fixed rates to a more appropriate level as it is not always appropriate advice for a client to take a longer term fixed rate and they should not be penalised for taking a shorter product.

Any rate reductions are always welcome news, especially given where rates got up to, but it's not that long ago that fixed rates started with twos and threes. Now we get excited that a few start with fours, rather than fives or sixes. Let's not forget that the reason rates went so high was due to the disastrous mini-Budget, and we're simply seeing them returning towards where they were, now that most of the policies introduced in that speech have been reversed and financial markets have recovered their confidence in the UK and its administration.

This is such welcome news. My only concern is that if other lenders don't follow suit, it could result in the rate disappearing. Bank of Ireland are an excellent lender however they are not ones for wanting huge volumes of business so if they get inundated with cases then they might withdraw the rate. It feels like all the lenders have a willingness to reduce rates but nobody can do it too quick too soon otherwise they could fall over with service levels.

Another step in the right direction and long may it continue. With inflation creeping up each month and with no end in sight, cheaper mortgage rates will be well received by borrowers and I hope that the Bank of England does not increase the base rate once again this month. I expect lenders will reduce their fixed rates further in the new year.

With Coventry having released a 5-year fixed rate at 4.69% recently, these new rates from Bank of Ireland show that much-needed competition is coming back to the mortgage market following the turbulence of the mini-Budget. Such competition can be as big a driver of mortgages as the Bank of England base rate so its return is great news for borrowers.