Gross mortgage lending across the UK fell by 28pc last year, and is set to fall by a further 5pc this year according to UK Finance, the banking trade body.
James Tatch, head of analytics at UK Finance, said he also only expects a “modest increase” in lending activity come 2025.
Currently, Generation Home – a small fintech lender – is offering the best five-year deal, at just under 4pc. No other lender has yet launched a mortgage deal starting with a three, according to Moneyfacts.
Peter Stokes, of brokerage Davidson Deem, said smaller lenders typically offered the best deals.
He added: “This is undoubtedly down to the big players postponing rate reductions before Christmas, knowing they would be working with a skeleton staff and many brokers would be shut down for the holidays.
“Now we are all back, I fully expect the big hitters to start lowering their rates to reflect the reduced cost of funds. Maybe we will even see the elusive three-point-something, five-year fixed rate [from a major lender] in the coming days.”
The Bank of England is expected to hold the Bank Rate steady at 5.25pc in its meeting next month, but markets are betting on a reduction in May.
Anil Mistry, of brokerage RNR Mortgage Solutions, said this anticipated move could spark “a cascade of mortgage rate decreases” timed for borrowers nearing the end of their current deals.
Darryl Dhoffer, of brokerage The Mortgage Expert, said until this May 2024 decision, it was likely that in the main only mortgages requiring big deposits would be cut.
He added: “The biggest reductions will be on retention products [i.e product transfers].
“Long-term, if inflation continues to fall this does put pressure on the Bank of England to cut rates sooner than maybe forecasted. In this game of rates, nothing is certain except the uncertainty.”
