Big cuts in rates have been made since the start of the new year by most mainstream lenders, in line with a downward trend we began to see towards the end of last summer when rates were at their highest.
It is always as well to err on the side of caution – particularly when borrowers have been through the painful experiences brought about by a crippling economic climate of a year and more.
This current trend should be welcomed and reveal positive signs that those financial uncertainties are lifting, and the market is creeping back to life.
Further evidence of this was provided by Moneyfacts in early January, reporting that average mortgage rates on two and five-year fixed rate deals had dropped in December to 5.93 per cent and 5.55 per cent, the fifth straight month where a fall had been recorded.
All of which has been helped by a renewed increase in market activity, bringing welcome respite for borrowers on cheaper fixed rate deals due to end shortly and resulting in two-year fixed rate mortgages slashed to below four per cent in many cases.
Nationwide was one notable lender which stepped up its role in this financial battle by announcing rates starting at 3.84 per cent for a switcher deal – its lowest figure in eight months.
If this trend can be maintained it can only strengthen confidence and reassurance in a market that has been far too turbulent and uncertain for anxious borrowers having to fight the assault on their finances on so many fronts.
The important thing to consider is that at present you don’t have to wait to take advantage of better deals. Mortgage providers are keen to lend and are reducing rates to attract borrowers, and there could be more good news on the way with speculation growing that the Bank of England may start cutting rates in May.
A sense of calm
It is potentially a very different climate for homeowners who have been in limbo over the last year, not knowing whether to wait and go onto a variable rate when their fixed rate ended or to stick with a fixed rate.
It has been a dilemma, and one made all the more unpalatable when fixed deals were pulled at the height of the crisis. This left people facing the prospect of paying hundreds of pounds extra a month – having a significant impact on so many households.
Thankfully, the signs are positive, things finally seem to be moving in the right direction again and we are already seeing the positive effect of the recent actions by lenders.
We can also glean some comfort from the fact that we are witnessing something of a boom in the numbers of properties being listed for sale, encouraging confidence and bringing more interest to a market that had become a little stagnant.