Cost of living correspondent<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n All major UK lenders are now offering fixed mortgage deals with an interest rate of less than 4%, but brokers say further cuts are not guaranteed.<\/p>\n A mini price war has broken out between mortgage providers, although many of the lowest-rate deals still require borrowers to provide a hefty deposit and a substantial fee.<\/p>\n More frequent cuts in interest rates by the Bank of England are expected this year, amid global economic turmoil.<\/p>\n However, lenders are already reflecting those predicted cuts in their latest deals, suggesting borrowers could be taking a risk by relying on ongoing drops in mortgage costs.<\/p>\n<\/div>\n “If the base rate does come down then there is a chance fixes could get a bit cheaper but there are no guarantees,” said Aaron Strutt, from broker Trinity Financial.<\/p>\n<\/div>\n Some tracker and variable rate mortgages move closely in line with the Bank of England’s base rate, which is expected to be cut from 4.5% on 8 May. <\/p>\n However, more than eight in 10 mortgage customers have fixed-rate deals. The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.<\/p>\n About 800,000 fixed-rate mortgages, currently with an interest rate of 3% or below, are expected to expire every year, on average, until the end of 2027.<\/p>\n The average rate for a two-year fixed deal is now 5.21%, according to the financial information service Moneyfacts. A typical five-year deal has a rate of 5.12%.<\/p>\n<\/div>\n However, lenders are offering attention-grabbing sub-4% deals again to some customers. They were seen briefly in February, but market-watchers had not expected them to return for a while.<\/p>\n The fallout from US tariffs policy has led the markets to settle on a view of more base rate cuts this year.<\/p>\n As a result, so-called swap rates – a key measure on which mortgage deals are priced – have fallen. <\/p>\n Equally, there is now little to tell between swap rates – and therefore mortgage rates – over two years and five years.<\/p>\n “More borrowers are taking two-year fixes on the assumption rates will reduce but many may be better off taking longer term fixes for the payment security,” Mr Strutt said.<\/p>\n<\/div>\n Rachael Hunnisett believes that many people want to step away from “the roulette wheel” of short-term fixed-rate deals.<\/p>\n “There is a cohort who just do not want to take that level of risk with their home,” she said, arguing that everyday payments, like children’s activities, are affected if borrowers find themselves having to pay a higher rate after two years.<\/p>\n She is the director of mortgage distribution at April Mortgages, which provides 10 and 15-year mortgages. The rates are generally higher, but the certainty of payments she feels is a selling point.<\/p>\n The company is now offering home loans at seven times a borrower’s income, which is higher than for many shorter-term loans.<\/p>\n Brokers say this is one example of a host of lenders competing by potentially allowing customers more flexibility to borrow larger amounts, particularly first-time buyers.<\/p>\n They also point to the UK’s biggest building society, the Nationwide, making changes earlier in the week that offered improved rates to those remortgaging – another sign of greater competition.<\/p>\n David Hollingworth, from broker L&C, said that the sub-4% deals were now becoming part of the core range of mortgages offered by the big lenders.<\/p>\n But he warned the global economic uncertainty meant these rates could quite quickly move either way.<\/p>\n As a result, borrowers were increasingly applying for deals, almost as a backstop months before their old deals expired, he said. If rates improve before the new deal starts, then they could still switch to a better rate.<\/p>\n<\/div>\n<\/div>\n![\"Getty](\"https:\/\/ichef.bbci.co.uk\/news\/480\/cpsprodpb\/22c2\/live\/44386340-21c7-11f0-b072-7bcc2f1fa000.jpg.webp\")
Getty Images<\/span><\/div>\n<\/div>\n<\/figure>\nTiming issue for borrowers<\/h2>\n<\/p>\n
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![\"Rachael](\"https:\/\/ichef.bbci.co.uk\/news\/480\/cpsprodpb\/8f6d\/live\/0cbe2460-21cf-11f0-89a9-cb5ed9bbefd9.jpg.webp\")
Rachael Hunnisett<\/span><\/div>\n<\/div>\n