Competition in mortgage market may drive rates lower.
Last week the Bank of England’s Monetary Policy Committee voted unanimously to keep its monetary policy on hold, maintaining interest rates at 0.25 per cent. The MPC stated, however, that rates could be cut again in the coming months even though the economic impact of the Brexit vote has been less significant than previously expected.
If there is a further cut in interest rates by the Bank of England then fixed interest rate mortgages could fall to less than 1% next year according to some experts, this in turn would give the housing market a boost.
According to a report in The Guardian, analysts at Bernstein based in the City of London say that another rate cut from the Bank of England would drive standard two-year fixed-rate mortgages to 1.1% per cent, and to less than 1 per cent for customers with a good credit rating. The analysts argue that rate cuts will be generated by competition in the mortgage market, which is traditionally dominated by six players controlling around 75% of lending.
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