According to data from analyst Moneyfacts, the average two-year fixed rate deal has dropped slightly to 6.79pc compared to last week. Meanwhile, borrowers taking out a five-year fixed rate will now pay an average rate of 6.28pc.
Chris Sykes, broker at Private Finance, explained that lenders are finally passing on discounts that were long overdue after the positive US and UK inflation data from a few weeks ago. He noted that lenders are typically quick to increase rates in order to protect their margins, but slower to pass on discounts to borrowers.
This week, other lenders such as Bank of Ireland (UK), Accord Mortgages, and Saffron Building Society have also reduced their rates. However, banks are cautioning borrowers that they should prepare for higher mortgage rates in the future, as there is no quick solution to lower prices.
Roland McCormack, director of mortgages at TSB, expects rates to remain at their current levels for the rest of the year and then settle between 4pc and 6pc in the medium term. Similarly, Zoopla’s executive director, Richard Donnell, predicts that mortgage rates below 5pc will make a comeback later this year, before eventually stabilizing between 4pc and 5pc.
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