Homeowners and prospective buyers have been offered what’s being described as a “golden window of opportunity,” as the lowest fixed mortgage rates have now dipped below 4%.
Market Expectations Shift
Markets are now pricing in four interest rate cuts by the Bank of England this year, potentially lowering the base rate from 4.5% to 3.5%. This shift follows increased global uncertainty, including fears of a trade war after Trump’s recent policy announcements.
Previously, markets were forecasting just two interest rate cuts in 2025. Now, more aggressive monetary easing is expected.
Impact on Mortgage Pricing
Interest rate expectations influence Sonia swaps—the inter-bank lending rates that affect mortgage pricing.
- On 9 April, five-year swaps stood at 3.76% and two-year swaps at 3.74%, both down from over 4% just a week earlier.
Lenders Respond Quickly
Coventry Building Society has introduced:
- A 3.89% two-year fixed-rate deal with a £999 fee (35% deposit required)
- For a £200,000 loan over 25 years: ~£1,044 monthly payment
- A five-year fixed option at 4.03%
- Nationwide offers a close alternative at 4.07%
These cuts follow similar reductions by MPowered Mortgages, suggesting the early stages of a lender price war.
Industry Reactions
Babek Ismayil, CEO of OneDome:
“This could be the start of a rate war. Borrowers may unexpectedly benefit from global uncertainty.”
Nicholas Mendes, mortgage technical manager at John Charcol:
“Investor flight from risk has driven swap rates down. This will put immediate pressure on mortgage pricing.”
Chris Sykes, technical director at Private Finance:
“Lenders may hesitate to cut too quickly. Those locked into higher deals could try to switch, creating potential losses for lenders.” “There’s also the risk that political developments, like Trump’s tariffs, could reverse quickly.”
Looking to remortgage or secure a better deal? Contact Piccadilly Estates today for expert insights and access to the most competitive rates available.
