Charcol says lenders can be expected to drop the price of fixed rates soon as the possibility of a short-term drop in interest rates increases.
Following the Bank of England's decision to leave the base rate at 4% for January, Ray Boulger, senior technical manager at Charcol, says: “There appears to be little chance of a base rate rise for some time.
“A cut in the next few months is looking increasingly likely, following some bearish economic figures over the last month and further evidence of a slowdown in consumer spending and the property market. Of course, only time will tell what impact the current global uncertainty and oil price concerns will have on the economy.
“The most recent wave of house price indices, reporting more measured growth, seem more accurately to reflect the anecdotal evidence from the market in terms of lending for house purchase and activity from estate agents.”
“In terms of the mortgage market, SWAP rates have sunk back over the past few weeks as the money markets have become less bearish and are now close to the November lows. This has eased upward pressure on fixed rates and lenders who resisted raising their fixed rates last month no longer need to do so. Furthermore the very competitive nature of the market is likely to result in some lenders now reducing their fixed rates very soon.”
With rates likely to remain low for the foreseeable future and the possibility of further drops, Boulger says there is little to choose between fixed and tracker rate deals.
He says: “Borrowers should base their choice on their own attitude to payment security and any views they have on the future direction of interest rates. They should also be aware of the increasing trend to impose collars on tracker and discount products.”