In the last couple of weeks there have been some encouraging signs of lenders prepared to make their mortgages more competitive. Both Nationwide and Abbey cut some of their fixed rates for new customers. Nationwide lopped as much as 0.30% off some rates and the 5-year fixes from both lenders now sit close to the top of the best buy tables.
Does this mean that other lenders are likely to follow suit?
Sadly, it doesn’t look likely that these moves will become a trend. The Governor of the Bank of England, Mervyn King, last week highlighted that further Base rate cuts were unlikely, due to the continuing rise in inflation. This has caused money market rates to lift and swap rates, which determine fixed rate pricing, have spiked upwards in the last week.
Although there has been little movement yet, any repricing is likely to lead to higher fixed rates rather than further reductions. Borrowers seeking a fixed rate mortgage should therefore not hold off, as delay could end up costing them more not less.
