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Lenders go below 5%

Journalist: Fran Ivens, The Telegraph

ended 05. October 2023

Request for the Telegraph 

A number of lenders have dropped their rates in recent days. Will we see more going below 5% on deals? 

What is needed to keep rates low for the next 6 months?

Are higher gilt yields a threat to more rates dropping?

7 responses from the Newspage community

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David Stirling
Independent Financial Advisor at Mint Wealth
Call me cynical, but there is this competitive rush at this time every year - lenders suddenly becoming more lenient (see Virgin's extended income ratios just announced) and the drive to hit targets before the end of the year to get those Xmas bonuses... however, any and every move downward in rates is most dearly welcome in the industry to help save our clients money!
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The downward direction of mortgage pricing is going to continue for the remainder of the year. The Big 5 lenders will continue to fight this out, as they scrap for mortgage business. With rates and lending criteria the most obvious levers lenders can pull, it is rates that will drop fastest and pricing in the 4% range will become the norm. The price war will continue for the remainder of this year and into 2024 as the disconnect between mortgage pricing and other economic factors continues.
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Craig Fish
Director at Lodestone Mortgages
Indeed, several lenders have dropped some of their 5 year fixed rates below 5%, but only just, and this has been in the back of a steady decrease in SWAP rates over recent weeks. However, this week we have seen an uptick in those SWAP rates, and so I think we will now see lenders tread with caution as the year closes. I don’t expect an all out rate war, or even to see 2 years rates drop below 5%, for quite some time yet. This will of course depend on inflation and wage data in the coming weeks and of course the remains two MPC meetings, but despite lenders needing to hit lending targets by year end, I see the mortgage market continuing as is, with no real uptick in transaction levels. If positive inflation data is seen however, we could see a good start to 2024.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
With competition from lenders fighting for market share of a reduced market I believe we will see more sub 5% deals over the coming months for the remainder on 2023.
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Denni Tyson
Mortgage and Protection Advisor at Henchurch Lane Financial Services
I think the domino effect is kicking in with some of the big banks reducing the rates under the 5% mark. Rate stability will all hinge on the Bank of England's next two meetings and the impact on core inflation in the run-up to the new year.
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Peter Stamford
Mortgage Expert at Stamford Home Finance
In the initial week of October, there was a concerted effort to drive interest rates below the 5% threshold. Lenders are evidently banking on the psychological impact of a rate that starts with a '4,' anticipating a favourable response from consumers. Now that this milestone has been achieved, the hope is for the downward trend to persist. Fingers crossed that the Bank of England won't disrupt this positive trajectory in the coming month.
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Graham Cox
Director at Bridging Hub
Despite higher gilt yields, two-year UK swap rates keep falling and are nearly below 5 percent. Which all bodes well for mortgage rates. As long as inflationary pressures continue to ease, there's every chance all mainstream mortgage products could start with a four by year-end. Which I wouldn't have put money on back in June.