Would-be buyers will welcome the Bank of England’s forecast that mortgage rates are set to fall further over the next quarter, following a downward trend in mortgages rates for the previous three quarters.
The Bank pointed to increased competition between lenders as just one of the factors driving a fall in borrowing rates.
Banks and building societies have also argued that the government’s Funding for Lending Scheme (FLS) – which offers banks borrowing at lower than available commercial rates – has also helped them offer cheaper finance for consumers.
“Lenders expect mortgage rates to fall further in coming months as funding costs continue to fall, mainly as a result of the Funding for Lending Scheme,” said Mark Harris of SPF private clients
“Those on the lookout for a cheap mortgage in coming months are therefore unlikely to be disappointed,” he said.
The Bank also said that the growth in lending for those with deposits of less than 25% was “a little more marked”, a fact that could present hope for first-time buyers trying to get on the first rung of the property ladder.
As an example of the lower rates on offer to buyers, Tesco Bank has recently re-introduced its 1.99% two-year fixed-rate mortgage as a result of high demand, after withdrawing the product in November 2012.
The rate is available to those with a 40% deposit, and customers will also need to pay a fee of £1,600 alongside a non-refundable “booking fee” of £195.
The Bank has also slashed rates on selected rates across its two, three and five-year fixed-rate mortgages by 0.5%.
Offering advice to consumers keen to take up low-rate mortgage deals, David Hollingworth of London & Country Mortgages said: “We’ve seen that, as lenders scramble to offer the lowest rate, it has had an impact on fees.
“This fee is not the highest on the market but it is a considerable arrangement fee, especially over a two-year period, so it’s important that borrowers factor that in.”