Mortgage Rates on the Move: A Shift in the Market

The mortgage market is experiencing a significant shift, with several major lenders cutting their rates in response to the Bank of England’s decision to hold interest rates steady. This move is expected to have a ripple effect throughout the industry, with more lenders likely to follow suit in the coming weeks.

Coventry Building Society is the latest lender to make the cut, reducing its two, three, and five-year fixed rates. This move comes on the heels of similar cuts by HSBC, NatWest, and Barclays, as well as smaller lenders like MPowered Mortgages, Kensington, and Virgin Money.

The reason behind this sudden shift in the market is the stability of swap rates, which are based on long-term predictions for the Bank of England interest rate. With swap rates holding steady, lenders are feeling more confident in their ability to offer better deals to borrowers.

“As swap rates have decreased steadily over recent weeks, we are starting to see this feed through to mortgage products,” said Jed Newton, director of brokers Trinity Financial. “We have seen several major lenders decrease rates and I expect other to follow. This will be welcome news for consumers.”

Image: Mortgage rates are on the move

But it’s not all good news. While some lenders are cutting rates, others are holding tight, waiting to see how the market plays out. Rachel Springall, a finance expert at Moneyfacts, warned that it may take some time for all lenders to make moves to cut their rates.

“It is likely borrowers will wish to see more lenders step up to slash fixed rates, but it might be too soon to see a flood of rate cuts,” she said. “It can take a couple of weeks for lenders to price in swap rate volatility, so borrowers may have to be patient.”

Mortgage-backed sales volumes are still down

Despite the positivity surrounding the recent rate cuts, mortgage-backed sales volumes are still down 49% compared to this time last year. According to Octane Capital, this is due to the impact of interest rate hikes on buyer appetites since the end of 2021.

However, the latest mortgage approval data from the Bank of England shows that monthly approvals are sitting above the 60,000 mark for the third consecutive month in April. This is a sign that the sector is finding its feet following the hold on the base rate since September of last year.

Mortgage approvals are on the rise

In other news, Marsden Building Society has launched a new range of mortgage products designed for borrowers aged 55 and over. The ‘Lending into Retirement’ range offers interest-only, repayment, and part-and-part options, with a maximum age of 80 at the end of the mortgage term.

Marsden Building Society launches new mortgage range

The launch of this new range is a sign that lenders are starting to cater to the growing demand for later-life lending products. As the population ages, it’s likely that we’ll see more lenders offering similar products in the future.

Overall, the mortgage market is experiencing a period of significant change, with lenders responding to the Bank of England’s decision to hold interest rates steady. While there are still challenges to be overcome, the recent rate cuts and launch of new products are a sign that the sector is moving in the right direction.