Lenders dropping rates faster than expected says Rightmove

Rightmove says the scale of rate cuts being announced by lenders - including the first sub-4% mortgage in many months - has surprised the market and analysts alike.

The cuts come in the midst of speculation that on Thursday the Bank of England’s Monetary Policy Committee will cut official base rate; and if it doesn’t happen this week, Rightmove believes September is a dead cert.

Matt Smith, Rightmove’s mortgage expert, says: “We've seen average mortgage rates drop at a pace not seen for a while this week, faster than many expected as lender competition hots up.

“The first sub 4% rate for those with larger deposits and prepared to pay a higher fee is the headline-grabber, but we've also seen some notable drops in rates in other loan-to-value brackets which should benefit more mass-market movers. It's interesting to see this competition for business increase even before the interest rate decision.

“Though there's still only around a 50% chance the base rate will be cut … if the current positive market sentiment continues, we could see further mortgage rate cuts."

And Gary Howorth, sales director at the estate agency Chestertons, adds: “To some, Nationwide’s decision to lower its rates may come as a surprise as the likelihood of the Bank of England cutting interest rates next month remains uncertain.

“Nationwide’s new mortgage products indicate the beginning of more positive market conditions for house hunters but also for existing homeowners looking to
re-mortgage. We have already seen buyer activity pick up after the General Election and expect the lower rates to boost buyer confidence further.

"This will inevitably lead to an increase in market activity over the coming months; especially if other lenders follow suit.”