Anticipated Decrease in Mortgage Rates Following Positive Inflation Data and Bank of England’s Outlook

Brokers and housing market analysts are predicting a slight fall in mortgage rates in the coming weeks, thanks to positive inflation data and an optimistic outlook from the Bank of England. The recent stability in the mortgage market is attributed to lower-than-expected inflation figures and the Bank of England’s decision to keep interest rates on hold.

Simon Gammon, managing partner at mortgage broker Knight Frank Finance, stated that the combination of these factors has added stability to the mortgage market. He expects to see more lenders follow suit and drop their rates in the coming fortnight. While the cuts may be marginal at first, borrowers can anticipate more meaningful decreases in mortgage rates soon.

The trend of rising mortgage rates since mid-February is expected to reverse, as swap rates have started to fall after the Bank of England’s recent decision. Ray Boulger, Senior Technical Manager at broker John Charcol, believes this shift in gilt yields and swap rates will give lenders room to cut rates, potentially leading to a decrease in mortgage rates.

Lucian Cook, residential research director at estate agent Savills, noted that the risk of the Bank of England delaying base rate cuts has diminished, providing more stability in the mortgage market. While this is positive news for borrowers, Cook cautioned that the current affordability barriers are unlikely to see significant changes until the first base rate cut occurs.

Despite this, current mortgage deals are available for buyers with substantial equity, with Barclays offering a two-year fix at 4.53% for those borrowing no more than 60% of the property’s value. Nationwide also has a five-year fixed rate mortgage at 4.19%.

The potential fall in mortgage rates has already started to impact borrower behavior, with an increase in mortgage approvals and house prices. Brokers have reported that borrowers are opting for short-term loans in anticipation of refinancing at lower rates later this year or next.

Overall, the outlook for the mortgage market is positive, with the possibility of lower rates on the horizon, providing buyers with more confidence to enter the housing market.