Robert Gardner, chief economist at Nationwide building society, said: “Most people take out fixed-rate mortgages, which are largely driven by ‘swap rates’ which already embody what investors think Bank Rate will be over a period of several years in the future.
“For example, with a five-year fixed-rate mortgage, lenders are already incorporating what the average rate is expected to be over the next five years, not just now.
“So, if the Bank of England continues to lower the Bank Rate gradually, in line with investors’ expectations, mortgage rates won’t change that much, and the swap rate and therefore mortgage rates will only decrease very gradually.”
Aaron Strutt, of brokers Trinity Financial, “While the five-year year fixes are the cheapest deals, many borrowers are still opting for two-year fixes because they expect rates to come down and the Bank of England to lower the base rate again over the coming months.
“A few lenders also offer more generous loan sizes when you take a five-year fix so many borrowers are pretty much forced to take them.”
Around 600,000 homeowners are on fixed-rate deals due to expire before the end of the year.
But brokers also warned the majority of deals will be geared towards property purchases from those with larger deposits.
David Hollingworth, of broker L&C Mortgages, said: “At the moment these lower rates are focused in the purchase market because that’s where activity is particularly muted.
“Remortgaging rates have come down as well, but we want to see the gap between them narrow.”
