The housing market may appear stagnant but one of the leading monitors of the mortgage market says many rates for borrowers are still falling.
“While the average two-year fixed rate had stalled in recent months, it has fallen by 0.04 per cent from June, so it appears that the trend of falling rates is now back on track” according to the latest market snapshot from independent market monitor Moneyfacts.
This news comes despite speculation in some quarters that, contrary to this mortgage market indicator, Bank of England base rate could rise in the near future.
“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 per cent at the start of June to 0.68 per cent in July” says Moneyfacts.
“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” it adds.
The downward trend is largely thanks to intense competition amongst lenders, who it is thought are feeling the pressure from an increased number of customers sitting on their Standard Variable Rate products and knowing that if the Bank of England decides to increase rates, a substantial chunk of their mortgage books could move to other providers rapidly.
“This may be the catalyst that is keeping rates low, as providers aim to lock customers into a deal with them” says Moneyfacts.
However, it warns that even before any possible Bank of England base rate rise, some mortgage products will become more expensive - so prospective borrowers buying property and prospective remortgagers should act now.