According to a Mortgage Solutions poll, 21% of respondents think a sub-1% fixed rate will be introduced onto the market in the next three months. A further 13% predicted within the next six months and 5% saying a year.
Last month, Yorkshire Building Society launched the lowest initial fixed rate on the market, available direct only at 1.07%.
Brian Murphy, head of lending at Mortgage Advice Bureau, said despite the lowest rates being offered direct to consumer, the main factor for a lender in offering competitive pricing was whether they were on track or ahead of their target for the year.
“If they are on track or ahead of their target, they will be less inclined to offer such competitive pricing. Conversely, if they are behind target, they may be persuaded to take less of a margin and offer headline-grabbing rates to attract new business.
“It doesn’t necessarily rule out a very low rate being offered through a mortgage broker, particularly if that lender has little or no high street presence and is needing to get back to target or market share,” he said.
David Hollingworth, associate director, communications, London & Country, said the poll results were backed up by a lender slowdown in top deal launches.
“Looking to the longer term fixes, some of the record-breaking rates have subsequently been withdrawn. There may need to be another shift in market expectation for base rate movement for that to really change.
“That said, with such a competitive market and lenders prepared to play the rate game in an effort to catch the eye of the borrower it’s still hard to rule it out just from a headline grabbing perspective. More important than a lone deal though is general market movement and a general shift to sub 1% is unlikely as things stand.”
When are we likely to see a lender move to introduce the industry's first sub-1% fixed rate deal?
