The Fastest Drop in Fixed Mortgage Rates in Nearly Two Years
Fixed mortgage rates are dropping faster over the last couple of months than they have done in the last two years. While it looks somewhat worse for lenders’ short term profits this will offer relief to potential buyers by allowing them to service fixed rate mortgages at more acceptable levels of interest. Also for the third month running there has been an increase in mortgage availability on the high street and from Challenger Banks.
The underlying story here is one of cautious optimism for lenders. After taking a ‘fixed rate grip’ on mortgages for new borrowing in an attempt to regain control, they’re slowly starting to release their grip as they realize that having a stranglehold on the market isn’t good for business. The improved mortgage availability should see those mortgages that were out of reach for buyers prior to the recent easing, start to reappear and reignite stalled transactions for would-be buyers worried about affordability.
As alluring as the falling fixed rates offer to the Buyer, such are not a given to result in a Buyer rush to complete a purchase agreement. The effects of falling fixed rates will, as previously stated be largely marginal until such time as that fixed rate offered falls dramatically below current levels, as were the case pre 2024. Even so, it would be unrealistic to expect a return to mortgage charges pre 2024 anytime soon. As ever, Buyer’s will need to remain extremely cautious, cross reference lender policies on a monthly basis (as these will change) and be extremely mindful of lending risk should the overall economic situation deteriorate between now and their intended purchase date.
Although there has been no detailed information given with regards to the specific lenders that have reformed their lending policy as well as individual rates and terms across the different bands of lending, it’s clear that there is now easing of policy by the high street as well as the challenger banks alike. This is a complete contrast to the previously restricted mortgage lending on the high street, and is very welcome indeed. However, this new-found way of lending will still be costly and unlikely to return to the low rates seen before the market collapse in 2024 anytime soon.
In summary, the market looks to have taken a step in the right direction in respect of lenders loosening their mortgage policies. While there are no clear indicators of what the immediate future will bring it is hoped that a period of improving mortgage deals will facilitate increased levels of activity in the sales market resulting in modest growth.
Practical Takeaways for Buyers:
- For those fixed-rate mortgage hunting, with the very rapid falls in late fixed rates across the board, now really is the time to get fixed at a much better rate than you would have had a couple of years ago.
- Check mortgage availability across a variety of lenders, including high street names as well as those that operate as online or challenger banks. This is particularly worth doing during the easing fixed rate back to more normal levels. Some will certainly offer the best fixed rate deals.
- Don’t be tempted by falling mortgage rates to agree a fixed rate deal that isn’t right for you in the long run as you could struggle to keep up with repayments when your fixed rate deal comes to an end.
- Always find out the lender’s latest policy every month as there is nothing to stop them from changing their mortgage access criteria at short notice.
The Final Takeaway:
The decline in fixed mortgage rates is an opportunity to look for a mortgage, but the opportunity will depend on sustained economic stability to be more than a short-term opportunity.
