Sub 4% mortgage - what next?

We are anticipating the rate reductions to continue as the first base rate cut looms ever closer. SWAP rates are seeing a steady decline as the leading economic indicators all show more positive data, and this looks set to continue. More lenders are likely to jump on the bandwagon with sub 4% rates, but caution that these are likely to only be for lower loan to value mortgages and over the longer 5 year terms. These may therefore not be for everybody. Anybody wanting only short term security and more flexibility can still expect to be paying in excess of 4%.

Nationwide’s 3.99% product was a headline grabbing positive statement on the direction of the market, but was limited to home movers with large deposits. What we need to see next is the Bank of England to provide some respite for borrowers with the first base-rate deduction, and for sub 4% products to become more widely available from more lenders and to more borrowers at higher loan to values.

We may well get more sub-4% fixes soon, especially if the Monetary Policy Committee acts to lower the base rate. The only catch with best buy deals at the moment is that they are limited to borrowers purchasing rather than remortgaging. Lenders tend to offer cheaper deals to those buying a property as there is not really a shortage of people needing to remortgage.
Lenders are trying to build up their business pipelines and some are already focusing on mortgage completions for next year. When they are fighting for market share, they tend to work harder to attract borrowers.
Nationwide's cheap five-year fix is limited to home movers, first time buyers and remortgaging customers will pay more. Some of the other lender's rates are now not much more expensive.
Halifax and Santander are two of the biggest lenders offering more generous mortgages when borrowers take five-year fixes. Many buyers would not be able to get a sufficiently large mortgage without this niche bit of criteria.

When the MPC finally open the treasure chest for borrowers by dropping base rate we will see the mortgage world kick up a couple of gears and we should see a borrowing bonanza for those looking for cheaper deals. In the meantime, the only deals on offer are incremental drops from lenders looking to target specific lower risk customers, with plenty of equity. Generally fixed money is on the drop with the notable sub 4% offer from Nationwide, which is sure to find itself with company over the next week as more of the big 6 jostle for headlines. 5 year fixed rates are still the favourite product for many, as they help feed the borrowing appetite of consumers hungry to borrow as much as possible. Lenders are happier to lend more on these products compared with a 2 year deal, as they offer longer periods of security for the lenders risk averse appetites. A great example of this is April Mortgages willingness to lend up to 6 times loan to income for long term fixed rate products.