Swap rates have fallen, the hope is mortgage rates will too.
Swap rates are falling which has fueled the hope that mortgage rates may now be cut to reflect lenders cheaper funding costs.
Some wholesale funding, which is used to underpin lenders mortgage rates has dropped to below 1%. This could mean that home-owners may see cheaper mortgage deals become more readily available.
To reflect this reduction in funding costs and to attract new borrowers some UK lenders such as Virgin have reduced their fixed rate deals. There are more attractive deals currently available but to achieve an offer you will need to be quick before the new low rate deals become over subscribed.
The price of lenders fixed rate mortgage deals are influenced by short term swap rates which have fallen recently. The 2 year swap rate currently sits at 0.91% and the 3 year rate is 0.92%.
In reaction to this both the Nottingham BS and the Progressive BS have launched highly competitive deals, and Abbey for Intermediaries has launched various new products including a low rate 5 year fix at 3.99% for new purchase and 4.09% for remortgage for 60% loan to value.
While some new deals have been launched due to falling swaps, it remains to been seen just how much mortgage rates will be impacted by lenders lower funding costs.
Many believe a rate reduction will not be passed onto mortgage-holders as in general lenders will be keen to prop up their dwindling profits.
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