You are here: Home - News -

Lender competition driving mortgage rates down to record lows

by: Mortgage Solutions
  • 10/07/2017
  • 0
Lender competition driving mortgage rates down to record lows
Average two-year fixed and variable rates have fallen to their lowest point on Moneyfacts records, defying economic indicators but could reflect lender fears over lack of SVR borrower loyalty when rates rise.

Charlotte Nelson, finance expert at Moneyfacts, said: “Lenders are perhaps starting to feel the pressure of an increased number of their customers sitting on their Standard Variable Rate (SVR), knowing that if the Bank of England decides to increase rates, a substantial chunk of their mortgage book could move to another provider almost overnight. This may be the catalyst that is keeping rates low, as providers aim to lock customers into a deal with them.”

The average two-year fixed rate fell to 2.25% in July this year in a steady trajectory from 2.55% in 2016.

Nelson said: “While the average two-year fixed rate had stalled in recent months, it has fallen by 0.04% from June, so it appears that the trend of falling rates is now back on track.”

Given mounting inflation and the Bank of England hinting at a base rate rise, falling rates are the last thing many would have expected, said Moneyfacts.

“The base rate debate has dominated the headlines in the past few weeks, which has had a knock-on effect on the interest SWAP rate, causing the two-year SWAP rate to rise from 0.53% at the start of June to 0.68% in July.

“Recently, the savings market has also seen a boost. This, alongside the rising SWAP rates, has historically resulted in mortgage rates rising, but these influences are currently having little effect on mortgage rates, which are still on a downward trajectory,” added Nelson.

There are 0 Comment(s)

You may also be interested in

  • RT @KeystonePF: We are getting ready for the @mortgagesols Buy to Let Market Forum next week, our BDM's will be on hand to discuss all thin…
  • RT @DanielleDennis9: There are only two weeks left to get your nominations in for #BMA2019 - vote now for your industry stars to make it a…
  • RT @montysblog: Jokers! Exacerbating the Mortgage Prisoner problem! Treasury sells 66,000 UKAR mortgages to inactive lender Citi - Mortgage…

Read previous post:
AIG to issue annual benefit statement to advisers and customers

Insurer AIG will issue all customers with an annual benefit statement after asking intermediairies how it could improve its proposition.

Close