Introduction to Mortgage Rates
The Bank of England has decided not to cut interest rates, but home buyers may still see some small mortgage rate cuts in the coming weeks. According to Matt Smith, a mortgage expert at Rightmove, lenders could make similar moves sooner, even with a hold in the Bank Rate.
Expectations for the Future
Two more rate cuts are expected by the end of the year. Smith says that lenders have some room to reduce rates further, giving home-movers hope for some small mortgage rate cuts over the next couple of weeks. This is because lenders do not solely rely on the Bank Rate when setting their mortgage rates.
Expert Opinions
David Hollingworth, director at L&C Mortgages, believes that borrowers will be disappointed by the decision but notes that mortgage rates "seem to have found a level for now." He adds that borrowers will likely continue to pick up a deal and hope to improve on it later. Rachel Springall, a finance expert at Moneyfacts, offers a different perspective, pointing out that lenders follow the swap rate market when tweaking mortgage rates.
Impact on Fixed Rates
Lenders tend to price in any base rate changes when setting fixed rate deals. This means that changes could be made based on expectations of future cuts. Many borrowers will be coming to the end of their current fixed deal, which may be lower or higher than current rates. Those who fixed rates after the mini budget might see improvements, while those with ultra-low deals from 2020 could see significant increases in monthly payments.
Tracker and Variable Rates
Tracker and variable rates are usually the first to be affected by changes in the base rate. However, not all deals guarantee to mirror base rate movement, and lenders can adjust standard variable rates as they see fit. A hold in the base rate will likely mean that borrowers with these types of mortgages will have to wait longer for payment reductions.
Conclusion
In conclusion, while the Bank of England has decided not to cut interest rates, home buyers may still see some small mortgage rate cuts in the coming weeks. Lenders have the ability to reduce rates further, and borrowers should be prepared for changes in fixed, tracker, and variable rates. It is essential for borrowers to stay informed and consider their options carefully to make the best decisions for their financial situation.
