Hopes grow that fixed-rate mortgages will dip under 4pc

FIXED-rate mortgage rates are expected to dip below 4pc within weeks, following lower-than-expected inflation figures and an upbeat outlook from the Bank of England.

Experts said lenders were poised to trim five-year mortgage rates, easing pressures on borrowers and fuelling optimism among homeowners.

The Bank of England maintained the Bank Rate at 5.25pc this week, after inflation rose by 3.4pc in February.

For the first time since 2021, no member of the Bank’s Monetary Policy Committee (MPC) voted in favour of increasing the rate.

Before the announcement, NatWest had already said it would cut remortgage deals by up to 0.24 percentage points, and tracker mortgages by up to 0.4 percentage points.

David Hollingworth, of brokerage London and Country Mortgages, said: “We won’t see sub 4pc next week, but it’s a case of weeks and months, assuming no more negative data comes up.

“The Bank of England is more open to the prospect of the Bank Rate coming down, which is driving optimism.

“A lot of the anticipated Bank Rate cuts are already priced in [to mortgage deals], so it depends if we see improvement quicker than expected.

“Rates won’t be slashed; there might be quite a few small rate cuts. If falls in the swap rate continue, we could easily see lenders cutting back, and five-year fixed rates heading back towards 4pc.”

Swap rates – the main pricing mechanism for fixed mortgages – dipped following the Bank of England’s announcement last Thursday.

Riz Malik, of mortgage brokerage R3, said: “Better-than-expected inflation suggests cuts will come earlier. This will raise hope of this mythical Bank Rate cut that we’re all desperate for.”