Financial Times - Mortgage rates set to fall further
Interest rates on fixed-term mortgages are nearing record lows as plummeting swap rates heighten competition among lenders.
The interest rate on five-year swaps, an indicator of the market’s view of the future direction of interest rates and the variable used by lenders to price their fixed-rate products, fell sharply from 1.63 to 1.47 per cent on Wednesday.
Aaron Strutt, product manager at broker Trinity Financial, told the Financial Times that when one lender made a big downward move on rates amid falling swap rates, others were very likely to follow. “Big lenders like HSBC and Yorkshire don’t like being undercut and being kept out of the best-buy tables,” he said.
Lenders had been struggling to get more applications, particularly from remortgage borrowers, so were starting to use enticements other than low rates. “Virgin Money is trying to tempt in more borrowers by explaining that they’re providing fast mortgage offers as well as decent rates. Over the past few weeks the lenders haven’t been asking so quite many questions and mortgage offers have been produced more efficiently,” he said.
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