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Will lenders be offering rates below 3% before the end of the year?

ended 04. October 2024

A journalist on the Sun would like comments from brokers on the following.

Swap rates have already fallen again off the back of Andrew Bailey's comments today that rate cuts could be more aggressive.

Big lenders have also cut rates again today.

Do experts think that we'll see lenders offering rates below 3% before the end of the year?

7 responses from the Newspage community

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Adam Stiles
Managing Director at Helix Financial Partners
The Skipton are already offering a sub-3% product transfer mortgage at 2.89%, although it comes with a hefty 3% fee and is up to 60% loan-to-value. If the Bank of England delivers one more rate cut, which seems likely after Andrew Bailey's hints this week, that could quickly feed through into swap rates, which determine lenders' fixed rates. However, we are only likely to see sub-3% rates at lower loan-to-values. We don't expect to see them widespread at higher loan-to-values until we have a few more rates cuts, which is possible by mid-2025.
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David Stirling
Independent Financial Advisor at Mint Wealth
With all the uncertainty ahead of the upcoming Budget, there is more chance of Bruno Fernandes getting Player of the Month than rates returning to sub-3%. With Middle East issues escalating and causing volatility in oil prices as we enter winter, added to the potential tax hardships to come, it's hard to see rates normalising below 3% this year.
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Ken James
Director at Contractor Mortgage Services
Andrew Bailey's comments have sparked another fire, but will this burn out or will more fuel be added to fan the flames? Swap rates have continued their downward trajectory following remarks from Andrew Bailey, the Governor of the Bank of England. It is essential to understand that when swap rates fall, it creates an opportunity for lenders to lower their fixed-rate mortgage offerings. However, it is crucial to note that while swap rate reductions may create favourable conditions for lower mortgage rates, there is no guarantee that lenders will pass on these savings to borrowers. Regarding the prospect of rate cuts below 3%, it is best to exercise caution and avoid speculation, as any potential rate cuts will depend on the rapidly evolving economic conditions, especially with the incendiary situation in the Middle East. If this continues to worsen it could very easily mean that we flip the script and rates start to rise.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
Governor Bailey's bombshell comments have opened the floodgates to more aggressive rate cuts, with the prospect of sub-3% mortgages, once dismissed as a pipe dream, now emerging as a tantalising possibility for homeowners. These views significantly depart from earlier comments advocating for gradual rate reductions, leading swap rates to fall sharply. Markets are now pricing in an all but certain chance of a rate cut at the Bank's next meeting in November. The prospect of reduced borrowing costs and increased competition in the mortgage market should help drive the rate-slashing momentum towards the end of 2024. However, policymakers must navigate carefully between supporting growth and maintaining price stability, with concerns surrounding wage growth and potential oil price volatility posing a risk to this dovish transition. The promise of more aggressive rate cuts could be a beacon of hope for homeowners, with falling rates acting as a wrecking ball to the walls of unaffordability.
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Dariusz Karpowicz
Director at Albion Financial Advice
All the signs point to it - some rates below 3%! Swap rates are falling, and Andrew Bailey is hinting at a potential decrease. The economic outlook is improving, and lenders are already trimming rates almost every week. It’s not unrealistic to see rates dipping below 3% for lower LTVs before year’s end. Of course, only an unexpected “black swan” event could derail this positive momentum.
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Jack Tutton
Director at SJ Mortgages
If the pace of rate reductions that we are currently enjoying continues until the end of the year, sub-3% rates would be a real possibility. However, there are many things that could derail this optimism. The autumn budget will be the biggest hurdle. The decisions that the Chancellor takes will be a make or break moment for interest rates.
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Elliott Culley
Director at Switch Mortgage Finance
It would be a huge turnaround if mortgage rates were to fall below 3% by the end of the year. However, I would expect the chances of this happening being slim based on current domestic and world events.