Why are lenders reducing rates after the Bank of England announced an increase?
10/02/2023
Summary
Why are lenders reducing rates after the Bank of England announced an increase?
The Bank of England hiked base rate last week by 0.5 percentage points to a 14-year high of 4 per cent but despite this, many Lenders are slashing mortgage rates.
Why?
Well some forecasts predict inflation has peaked, with the Bank indicating this may be its last consecutive increase. That could well be inspiring confidence and encouraging lower rates to be released.
Also, in December, mortgage approvals fell for a fourth consecutive month, reaching the lowest level seen since May 2020. Perhaps this could be another reason why lenders are cutting their margins and offering reduced fixed rates, in order to compete for business. They are still earning a margin on Tracker deals, which are usually a set % above the Bank of England rate.
Whatever the reason, it really is not as dire out there as we all first expected when the BOE started their rate increases last year.
