the lenders will focus on taking market share.<\/a> This sets the stage for a price war in the new year, led by the larger high street banks.<\/p>\n\u201cGiven that leading fixed rates now sit at 3.55 per cent, it\u2019s possible that we see two-year fixed rates below 3 per cent by spring.\u201d<\/p>\n
Labour MPs hope that cooling inflation and lower mortgage rates will put more money into people\u2019s pockets and lead voters to feel more optimistic about the economy, although they are not expecting an immediate poll boost.<\/p>\n
Labour has made putting more money in people\u2019s pockets a key aim of this Parliament, but have made little headway with a struggling economy.<\/p>\n
Chancellor Rachel Reeves said that the six interest rate cuts since the general election was \u201cthe fastest pace of cuts in 17 years\u201d and \u201cgood news for families with mortgages and businesses with loans\u201d.<\/p>\n
She went on: \u201cBut I know there\u2019s more to do to help families with the cost of living. That\u2019s why at the Budget we froze rails fares and prescription charges, and will be cutting \u00a3150 off the average energy bill next year.\u201d<\/p>\n
During a visit to a north London community centre, the Chancellor told broadcasters that the successive cuts in rates could knock \u00a3100 off monthly mortgage payments for first-time buyers.<\/p>\n
A backbencher told The i Paper the rate cut was \u201cgood news\u201d, but added: \u201cIn 2015 maybe there\u2019d be a correlation between rates and party polling.\u201d
\u201cNow: no.\u201d<\/p>\n
The Conservatives said that the rate cut reflected underlying weakness in the UK economy.<\/p>\n
Sir Mel Stride MP, the shadow chancellor, said: \u201cLower interest rates will be welcome news for many families \u2013 but rates are being cut despite inflation remaining well above target, thanks to rising unemployment and low growth under Labour.<\/p>\n
Lenders eager to get market moving<\/p>\n
Justin Moy, managing director at EH Mortgages, added: \u201cIt\u2019s unlikely we will see a significant change before Christmas, given that the base rate cut expected today has already been priced into the current deals.<\/p>\n
\u201cLenders will pull every trick to encourage the property market to start moving, as rates will continue to slide beyond that 3.5 per cent threshold.\u201d<\/p>\n
There are approximately 1.8 million homeowners on deals who will need to remortgage in 2026 as their deals expire, giving lenders an opportunity to entice customers with lower rates.<\/p>\n
David Hollingworth, associate director at L&C Mortgages, said: \u201cRising market expectation of another rate cut has already helped to drive down the cost of fixed rate mortgages.<\/p>\n
\u201cThat will be welcome news for those thinking about moving home or coming to the end of a deal, and lenders have shown little let-up in their repricing activity as the festive season approaches.<\/p>\n
\u201cI\u2019d expect to see that competition to continue in the New Year, as lenders look to get off on the right foot.\u201d<\/p>\n
The average two-year fixed mortgage rate is 4.82 per cent, according to Moneyfacts, whilst the average five-year fixed rate is 4.9 per cent.<\/p>\n
However, there are rates available for much cheaper on the market, with Santander offering a two-year fix deal of 3.55 per cent and NatWest offering a five-year fix deal for 3.75 per cent.<\/p>\n
The best deals are reserved for those with the highest deposit or equity in their property.<\/p>\n
Early 2026 a \u2018golden era\u2019 to buy<\/p>\n
It comes as inflation fell by more than expected to 3.2 per cent in November, official figures showed this week.<\/p>\n
The reading is the lowest since March and has helped prompt the BoE Monetary Policy Committee (MPC) to cut rates, experts say.<\/p>\n
The Bank is also confident that inflation, while still above the 2 per cent target, will fall more quickly than expected, partly due to a push to cut electricity bills in the Budget and future oil and gas price forecasts.<\/p>\n
Mortgage holders who are coming to the end of their fixed term may wonder whether to wait for a fall in rates or lock in a new deal now.<\/p>\n
Experts have said it is possible to lock in a rate now and warned that whilst some rates will come down further, for others it might not be wise to wait.<\/p>\n
Andrew Montlake, CEO of Coreco mortgage brokers, said: \u201cToday\u2019s cut will have the knock-on effect that mortgage rates look certain to decrease slightly and kick off a mortgage melee in the New Year. <\/p>\n
\u201cLenders will be very keen to make the most of a market that is still waiting for pent up demand to be released and mortgage rates that consistently start with a 3 should be the norm for the year ahead.<\/p>\n
\u201cA word of caution should be given to those waiting for rates to fall even further as this does not seem to be the case, and the first part of next year looks like it could be a golden era to buy as mortgage affordability improves before house prices begin to rise once more.\u201d<\/p>\n
Meanwhile, people on variable or tracker rates, which follow the BoE\u2019s base rate, will see an immediate drop to their monthly repayments.<\/p>\n
Holly Tomlinson, financial planner at Quilter, said: \u201cFor mortgage holders, today\u2019s expected cut will be most immediately felt by those on tracker and variable-rate deals, where monthly repayments should begin to edge down.<\/p>\n
\u201cFor those with six months left on their current fixed mortgage deal, it can be worth securing a new fixed rate now to avoid moving onto a higher standard variable rate. Many lenders allow you to book a rate in advance, and you can review the market again before your new deal starts.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Bank of England has cut the base rate today, as was widely expected, which will see more lenders…\n","protected":false},"author":2,"featured_media":323228,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,814,25949,2295,56,54,55],"class_list":["post-323227","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-interest-rates","tag-mortgages","tag-property","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/323227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=323227"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/323227\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/323228"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=323227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=323227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=323227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}