Views on first sub-5% rates emerging
The Mortgage Works has launched a rate at4.99%, the first sub-5% rate in months.
What are your views on this? Has this kickstarted a rate war? Why are rates declining?
Copy article
10 responses from the Newspage communityCopy all
Copy all
Copy
This is another step in the right direction. As inflation starts to ease and move someway toward the Bank of England's target, it was always expected that the pressure on interest rates would ease. This has been reflected in swap rates gradually trending lower recently. This should continue to filter through to mortgage lenders so we'd expect to see other lenders repricing their products lower.
Copy
This is very welcome - lenders have been moving towards this for a few weeks now and with swap rates continuing to decline it's enabling the stable environment needed in the economy to allow lenders to reduce their rates. Hopefully, we'll see more of the bigger players reduce their rates over the coming days with smaller lenders then following suit. I don't anticipate a full-on price war as everything is still on a knife edge and it will only take a small rise in inflation to spook the markets and we'll be back at square one so I think this slow and cautious approach from lenders will continue for some time.
Copy
Watching lenders shout about dropping rates is a bit like my 5-year-old daughter expecting praise for cleaning up the mess she made in her bedroom. These reductions are nothing more than a genital measuring competition. Albeit a step in the right direction, we still have a long way to go before we can breath a sigh of releif. Come back to me about lower rates when they are low enough to make a positive impact on people's lives. Instead we are just being held to ransom at the moment and the majority of homeowners are living in a constant state of fear.
Copy
It is great to see sub-5% rates on but to let products, however, most of those have large arrangement fees to compensate this. The bigger issue is the stress-test rate applied to the affordability calculations for landlords, which a reduced pay rate does not overcome as there is usually a large margin built on top.
Copy
The Mortgage Works have a rate of 4.89%, but both of these come with a 3% arrangement fee, which overall isn't too bad, but is still a deterrent to many. Rates are dropping because of positivity with the SWAP rates, and whilst many lenders are reducing rates, we can't yet declare an all-out rate war, as there is still uncertainty surrounding inflation and what happens next with the BOE base rate. These factors ensure that lenders tread water rather than dive right in at the deep end.
Copy
This marks another step in the right direction as buyers adapt to a challenging reality, where lower-priced properties are gaining appeal in the face of rising monthly mortgage costs.
While this rate adjustment is a modest effort by lenders to encourage borrowing, the primary obstacle remains the persistently high inflation rate.
The market eagerly anticipates a substantial shift, which may materialize with a reversal in the inflation trend, followed by a significant reduction in interest rates.
Until such a scenario unfolds, we find ourselves navigating what can be described as a 'new normal.' Transaction levels reminiscent of the past remain elusive as the market undergoes a recalibration to align with the ever-evolving economic landscape.
This recalibration is establishing a fresh baseline for property prices and buyer affordability in the context of these elevated interest rates.
While this rate adjustment is a modest effort by lenders to encourage borrowing, the primary obstacle remains the persistently high inflation rate.
The market eagerly anticipates a substantial shift, which may materialize with a reversal in the inflation trend, followed by a significant reduction in interest rates.
Until such a scenario unfolds, we find ourselves navigating what can be described as a 'new normal.' Transaction levels reminiscent of the past remain elusive as the market undergoes a recalibration to align with the ever-evolving economic landscape.
This recalibration is establishing a fresh baseline for property prices and buyer affordability in the context of these elevated interest rates.
Copy
Mortgage raates continue to fall, driven by a markedly better outlook for inflation in the last month or so. However more expensive energy imports, with sterling at a 6-month low against the dollar, will concern the Bank of England. Any resurgence of inflation could lead to further base rate increases.
Copy
It is great to see the first few lenders offering sub-5 % interest rates. Forecasts indicate that the bank of England base rate is now close to its peak. Swap rates are also pointing towards further rate drops to come. As year end gets closer lenders have lending targets to meet meaning further rate cuts are expected.
Copy
The modest rate reduction to sub-5% by The Mortgage Works isn't much of a relief in the face of the significantly higher borrowing costs we see now, compared to the lower costs in preceding years. Buyers are adjusting to a harsher reality, considering lower-priced properties as monthly mortgage costs climb. This rate adjustment seems to be a small attempt by lenders to encourage borrowing, yet the real barrier remains—the ongoing high inflation. The market awaits a substantial change, which could come with a reversal in the inflation trend, followed by a notable reduction in interest rates. Until that scenario unfolds, we're navigating a 'new normal.' Transaction levels of yore seem elusive as the market recalibrates to align with current economic dynamics, setting a fresh baseline for property prices and buyer affordability amidst these higher interest rates.
Copy
The crucial takeaway here is not merely to focus on interest rates but also to scrutinize the accompanying charges. While fees have indeed decreased, it's worth noting that, in many instances, associated charges have actually risen.