The drop in rates was widely expected, and mortgage rates have been falling for weeks in anticipation.
So The i Paper spoke to brokers to find out what action you should take.
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If you do nothing, you will revert on to your lender’s ‘standard variable’ rate, which will be far more expensive than most other deals.
With many trackers you also have the option to leave penalty free if cheaper fixed rates become available, whereas with fixed deals you are locked in to the rate and usually face exit charges if you want to end it early.
“As fixed rates work on a prediction of the market, they move more quickly than trackers. The main benefit at the moment to a tracker is most, will not have penalties to come out of them, so if you are thinking of moving or downsizing, this could be a better option.”
“While these deals may not always look cheaper at the outset, they can become more cost-effective if rates fall more quickly than expected,” he says.
What to do if your mortgage fix ends this summer
If rates get cheaper, you can often switch onto a cheaper deal before your current one expires.
“The timescales most lenders now offer take a new deal has moved from a six-month window to three or four months, as the markets have become more settled,” explains Justin Moy of EHF Mortgages.
“While rates are on a downward trajectory, there is no guarantee that today’s deals will still be available in a few weeks or months. Markets can move quickly, and lender pricing can change with little notice,” says Mr Mendes.
What to do if you are in the process of buying a home
“Buyers need to first establish the borrowing power before they look for any property, to make sure that the mortgage is affordable,” says Mr Moy.
“General advice would be to apply as soon as your offer is accepted, but if we know rates are improving you can wait a couple of weeks before applying. You can amend your rate with the lender post application as well, if rates continue to improve.”
For those with deposits of just 10 per cent, rates are generally well above 4 per cent.
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