Following the Bank of England’s hints of a summer base rate cut, three major High Street lenders have this week cut their rates, in a first tentative move towards a 'new normal' for the mortgage market.
It is expected, in the coming weeks, that more mortgage companies will follow in the footsteps of Barclays, Natwest and HSBC, marking the beginning (hopefully) of a slow and steady unwinding from the elevated rates of late (a product of pre-election competition between lenders).
Currently, according to Moneyfacts, the average interest rate on two-year fixed mortgages stands at 5.96%, and while any reduction from this is going to make borrowing more attractive, the wider context is important to take into account.
This relates, specifically, to the precedent set by the last decade of historically low rates (1.5-2.5%.) Against this backdrop, the ‘new normal’ for mortgages, which is expected to be in the 3.5% to 4.5% range, might still be considered somewhat high, albeit perhaps 'better than nothing' in the grand scheme of alleviating the financial pressures on home-movers.
Looking ahead to the remainder of the year, this picture will likely continue to improve as political certainty resumes following the election, and in the event that an interest rate cut on 1st August, when the MPC (Monetary Policy Committee (which sets the rates) has its next meeting, comes to fruition.
Should this happen, then at least some of the financial pressures holding back the economy might be relieved, albeit with a caveat that the Bank does have a tendency to respond to falling inflation, with a greater degree of caution.
In summary, even these small, incremental improvements are likely to have aggregate gains for the home-buying picture, with greater mortgage stability - in particular - extending some much-needed reprieve to the 1.6 million existing borrowers whose low fixed-rate deals are coming to an end this year.
For more information on the Maidenhead property market, please contact property@braxtons.co.uk or call 01628 674234.