Mortgage Rates Fall as Lenders Compete for Business, But Housing Market Remains Precarious

Mortgage rates continue to fall as lenders compete for business, but the UK housing market remains precarious amid uncertainty over the timing of interest rate cuts.

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Mortgage Rates Continue to Fall as Lenders Compete for Business

The UK mortgage market is experiencing a period of uncertainty, with lenders cutting rates in an effort to attract borrowers. Clydesdale Bank has reduced selected residential and landlord rates by up to 73 basis points, while Accord has cut buy-to-let deals by up to 40bps.

The reductions are a welcome relief for borrowers, who have been facing higher mortgage rates in recent months. The move is seen as a response to the changing market conditions, with lenders competing for business in a slowing economy.

“The strong recovery in mortgage demand seen in the early part of the year has petered out of late, in keeping with the rise in quoted mortgage rates over the past few months,” said Peter Arnold, EY UK chief economist.

The Bank of England’s money and credit figures also pointed to a strong rise in consumer borrowing in May, with borrowing bouncing to £1.5bn from £800m in April. This was largely driven by an increase in borrowing on credit cards.

![Mortgage Rates](_search_image mortgage rates graph)

However, not everyone is celebrating the rate cuts. Tom Cuppello, director of risk at Broadstone, warned that the housing market’s recovery remained “precarious” amid uncertainty over the timing of interest rate cuts.

Economists think there is a roughly 50 per cent chance that the Bank will cut rates in August, although it depends on the next batch of inflation figures.

In the meantime, borrowers are advised to take advantage of the current rates on offer. With lenders competing for business, there are some great deals to be had. But borrowers should also be cautious, as the market can change quickly.

“More borrowing at higher rates, at a time when the cost of living is still high, should be cause for additional vigilance amongst lenders,” said Karim Haji, global and UK head of financial services at KPMG.

Despite the uncertainty, the UK housing market is showing signs of resilience. According to Nationwide, the average UK house price rose by 0.2% month on month in June, despite mortgage rates remaining high.

![UK House Prices](_search_image uk house prices graph)

The recovery in the housing market is a positive sign for the economy, but it’s clear that the mortgage market is still facing challenges. As the market continues to evolve, borrowers should stay informed and be prepared to adapt to changing conditions.

What This Means for You

If you’re a borrower, now is a good time to review your mortgage options. With lenders competing for business, there are some great deals to be had. But be cautious, as the market can change quickly.

If you’re a homeowner, the rise in house prices is a positive sign for the value of your property. However, it’s clear that the mortgage market is still facing challenges, and you should be prepared to adapt to changing conditions.

Conclusion

The mortgage market is experiencing a period of uncertainty, with lenders cutting rates in an effort to attract borrowers. While this is a positive sign for borrowers, it’s clear that the market is still facing challenges. As the market continues to evolve, borrowers should stay informed and be prepared to adapt to changing conditions.

![Mortgage Market](_search_image mortgage market graph)