UK first-time buyers hit by steeper rises in starter home prices.
Rates on two-year, fixed-rate mortgages – already at record lows – could fall even further because of tough competition among lenders to attract new customers, according to leading City analysts.
Super-cheap home loans could give the market a boost after the vote for Brexit, which forced Threadneedle Street to cut rates to 0.25% in August. This was the first rate-cut for more than seven years and economists expect the Bank to cut the base rate again – to just 0.1% – possibly in November.
According to analysts at Bernstein, which is based in the City, another rate cut from the Bank of England would drive standard two-year fixed-rate mortgages to 1.1% – and to less than 1% for customers with a good credit rating.
The analysts at Bernstein said that customers looking for two-year fixed-rate mortgage with deposit of at least 20% of the value of the property would currently pay between 1.6% and 1.7%. “The bet is that it gets another 50 basis points [half a percentage point] cheaper,” the analysts said.
Mortgages Of Less Than 1% Available And Thriving
Six players controlling around 75% of lending
The Bernstein analysts argue that rate cuts will be generated by competition in the mortgage market – traditionally dominated by six players controlling around 75% of lending – and the fact that it is relatively cheap for lenders to attract new customers.
Figures from a property website, Rightmove, published recently show that house prices are up 4% on last September. Hollingworth said that any further rate would spur activity in the market – even through rates are already record lows.
**Content Original Source can be located here: The Guardian