As lenders benefit from lower rates in the wholesale financial markets, borrowers may soon begin to see much lower rates on offer.
As a result of unexpected turbulence in the markets, lenders are experiencing lower ‘swap’ rates, which in many cases will be passed on to customers. The changes also mean that the Bank of England base rate is unlikely to rise until August 2019. Only a few weeks earlier, experts had predicted that the UK bank rates would start to rise this year.
Lenders are now expected to consider their products and how low they can set product prices. A couple of lenders have already launched products which are competitive. The Newcastle Building Society has offered a two year fixed rate deal for borrowers with a 5% deposit at 3.59%.
However, other lenders are now responding with even better deals. According to a broker from London & Country, David Hollingworth, the swap rates were “astonishingly low” which often means that lenders are able to offer better deals.
Borrowers may now be faced with the dilemma of whether to select a tracker rate product or opt for the security of a fixed rate. Mortgage advisers spend a considerable period of time undergoing CeMAP training, which equips them with the knowledge to help consumers decide which is the most suitable option for them. Hollingworth stated that he believes the majority of lenders will opt for the safety of a fixed rate, just in case the bank rates do rise in the near future.
