Lenders trim rates as first-time buyer numbers remain strong
Swap rates continue on a largely downward trend, which appears at odds with some of the noises coming out of Threadneedle Street. Three members of the Bank of England’s monetary policy committee have warned that the UK remains on track to raise interest rates several times over the next couple of years, but despite this, the markets are not factoring in a rate rise anytime soon. With Barclays, TSB, Coventry and Newcastle building societies cutting mortgage rates in the past week, there does not seem to be any upwards pressure on pricing, which is good news for borrowers.
Figures from UK Finance indicate that remortgaging numbers were strong in April as borrowers take advantage of low rates. Lenders are keen to secure some of that business by offering longer timeframes for borrowers looking to remortgage at the end of their existing deal. Nationwide has extended its remortgage offer period from 90 to 180 days, while Barclays is running a pilot whereby it is extending its offer period from 90 to 150 days. Borrowers who are worried about rates rising can therefore secure a fixed rate several months before their existing product ends and can move onto it once their deal expires.
The UK Finance figures also reveal that first-time buyers are continuing to take advantage of low mortgage rates at high loan-to-values, a slowdown in price growth – and falls in some areas – and government schemes such as Help to Buy. This is encouraging as first-time buyers are important for the overall health of the housing market – if there is no movement at the bottom of the ladder, there won’t be any further up.
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