Brokers say lenders could introduce a selection of sub-3 per cent five-year fixed rates in the coming weeks following a decline in five-year swap rates.
As at 9 September, sterling five-year swap rates stood at 1.97 per cent, down 32 basis points from 2.29 per cent in July.
Coreco director Andrew Montlake says: “Given the fact we have seen five-year money at its lowest point since early April and it has not been consistently lower at any time this year, I suspect we will see a new breed of five-year fixes dipping below the 3 per cent level.”
John Charcol senior technical manager Ray Boulger says: “On 4 July, five-year swaps were 2.29 per cent, so with that sort of reduction there is clearly scope for lenders to cut their fixed rates. The probability is we will see more sub-3 per cent five-year fixed rates coming out over the next couple of weeks.”
As lenders traditionally boost lending volumes in the last three months of the year to hit targets, brokers believe this will also help fuel lower mortgage rates.
Montlake says: “We always see more competitive products at this time of year but this year could be more intense as lenders look to make up any ground they may have lost during MMR implementation.
“All signs are that it will be a busy last quarter and this is good news for consumers, who are able to take advantage of lower products before rates eventually rise.”
Boulger adds: “There are always one or two lenders behind on their targets at this time and looking to beef up volumes. They can do that because of lower swap rates.”