The Bank of Ireland is set to cut the rates on its 5-year fixed rate product as of tomorrow to 4.65% at 60% loan-to-value (LTV).
The move follows recent cuts by both Coventry Building Society and Principality Building Society which sees both lenders offer sub-5 % fixes.
The move has been widely welcomed by brokers who have seen the market fluctuate widely in the months since the ill-fated Prime Ministership of Liz Truss.
Graham Cox, director at Self Employed Mortgage Hub, said the move from lenders was promising but he raised concerns about the upcoming interest rate decision from the Bank of England and the impact that could have on prices.
“Considering that in October the best 5-year fixes were about 1% higher, it’s highly encouraging news to see that mortgage rates are falling quite rapidly, said Cox. “What we don’t know yet is how much of the anticipated 0.5%-0.75% base rate increase on December 15th will be passed onto consumers.
“It’s possible lenders won’t pass on the full amount and the best mortgage rates will remain below 5%. All in all, this is great news for borrowers.”
Stuart Gregory, director at Lentune Mortgage Consultancy, was equally pleased to see Bank of Ireland’s move.
He said: “This is great news and an early Christmas Present for borrowers. Above all else, what the mortgage market needs is competition between lenders and this kind of move is a positive sign for everyone moving forward.
“It’s always important, of course, for borrowers to be advised based on their own individual circumstances but overall this is positive to see.”
Meanwhile, Scott Taylor-Barr, who is a financial Adviser at Carl Summers Financial Services, was clear that despite the positives of the move the blame for where prices currently stand is clear.
“Any rate reductions are always welcome news, especially given where rates got up to, but it’s not that long ago that fixed rates started with twos and threes.
“Now we get excited that a few start with fours, rather than fives or sixes. Let’s not forget that the reason rates went so high was due to the disastrous mini-Budget, and we’re simply seeing them returning towards where they were, now that most of the policies introduced in that speech have been reversed and financial markets have recovered their confidence in the UK and its administration.”
And Chris Schutrups, founder at The Mortgage Hut, has tipped this as a sign of things to come: “We’ve seen lenders start to reprice rates downwards off the back of a more stable swap market.
“Speaking with national and regional lenders, we are under the impression that throughout December and moving into January we’re likely to continue to see mortgage interest rates soften further. This is great news for consumers.
While Gary Boakes, director at Verve Financial, questioned if it was “a last gasp attempt for lenders to generate some business for 2022 and start 2023 strong?”
But despite his slight scepticism he too welcomed the move: “Either way, this is ultimately fantastic news and with similar rates coming from Principality and Coventry this week, let’s hope this trend continues.
“All we need is some of the big boys, namely Halifax, NatWest and Nationwide to follow suit and we can go into 2023 with the market looking a lot more encouraging than a month ago.
“With the market moving this quickly, this is why it is imperative that customers need to engage with a mortgage adviser.”
Matthew Jackson, director at Mint FS, meanwhile calls on lenders to follow suit with their 2-year products: “This is further evidence of the reduction in cost of fixed rate money (swap rates) filtering through to the market. It is great to see another high street lender join both Coventry Building Society (4.69%) and Principality Building Society (4.60%) in reducing their rates.
“Hopefully, this is a sign of things to come as lenders look to secure the last pieces of business in 2022 and position themselves for new applications in the new year.
“The next logical step for lenders is to reduce 2-year fixed rates to a more appropriate level as it is not always appropriate advice for a client to take a longer-term fixed rate and they should not be penalised for taking a shorter product.”
And Sabrina Hall, mortgage adviser & protection adviser at Kind Financial Services, agreed that the market needs to see other lenders move in the same direction.
“This is such welcome news,” she said. “My only concern is that if other lenders don’t follow suit, it could result in the rate disappearing.
“Bank of Ireland are an excellent lender however they are not ones for wanting huge volumes of business so if they get inundated with cases then they might withdraw the rate.
“It feels like all the lenders have the willingness to reduce rates but nobody can do it too quick too soon otherwise they could fall over with service levels.”
And Lewis Shaw, owner and mortgage broker at Riverside Mortgages, also agreed that more needs to be done.
“This is something and nothing,” said Shaw. “It’s great to see rates coming down, which is positive, but one swallow does not a summer make.
“Until we see the higher LTV rates begin to fall to allow first-time buyers a fair crack of the whip, we’re not out of the woods.
As with Graham Cox the upcoming Bank of England interest rate decision also raised some questions for Amit Patel, adviser at Trinity Finance, who said: “Another step in the right direction and long may it continue.
“With inflation creeping up each month and with no end in sight, cheaper mortgage rates will be well received by borrowers, and I hope that the Bank of England does not increase the base rate once again this month. I expect lenders will reduce their fixed rates further in the new year.
But despite those fears Rob Gill, managing director at Altura Mortgage Finance, said competition could have an equal impact as the Bank of England’s decision: “With Coventry having released a 5-year fixed rate at 4.69% recently, these new rates from Bank of Ireland show that much-needed competition is coming back to the mortgage market following the turbulence of the mini-Budget.
“Such competition can be as big a driver of mortgages as the Bank of England base rate so its return is great news for borrowers.”
