Over the next few months mortgage rates are predicted to drop well under 1.5% because new lenders are expected to quickly enter the market. This new completion will help to drop mortgage rates making them more affordable for plenty of homeowners that are looking for ways to cut their household budgets. In fact, if the mortgage rates do fall by about a fifth as predicted, typical home repayments for an average home could save homeowners as much as £600 every year.
Most of the new lenders that are expected to jump into the market are expected to come because of the new cheaper loans being offered by the Bank of England. In addition, they also are going to find themselves at a much better spot when it comes to passing on low rates to customers because they are already getting a break on the rates.
Some of the new lenders expected to soon be offering customers new rates are NBNK and Home & Savings Bank. Another household name is expected to come out of the woodwork and start offering home loans by the middle of the summer. Some of these new lenders are going to focus on niche areas of the market, but others are thought to cater their business mostly to the average home buyer.
Ian Gordon, an Investec banking analyst believes that mortgage rates might fall by as much as 0.2% as a result of the new competition with the new lenders, the cheaper Bank of England funding, and the renewed appetite to lend being shown by banks. At the moment, the lowest mortgage rate available on the market is a two year fixed rate mortgage that is offered by Chelsea Building Society for 1.69%. A .2% drop would therefore make the lowest rate on the market below 1.5%