Homeowners looking to remortgage in the near future will have competition among lenders helping them realize cheaper interest rates.  It is the expectation that lenders will soon be competing for the attention of borrowers and the result will be that borrowers will find better interest rates, higher loan to value levels, and possibly even an easing in the usually tightfisted lending practices. 

Recently the Royal Bank of Scotland cut their 5-year fixed rate to 4.79% for those with a 10% deposit.  In addition the lowest ever 5-year fixed rate remortgage deal was offered by HSBC at 2.99%. Santander then matched HSBC with a mortgage for existing current account customers at the same rate.

The main change in the lending market is that lenders are taking advantage of the Funding for Lending scheme being offered by the government.  The offer of low cost loans to lenders is helping lenders escape the higher funding costs found on the global lending market.  The result is cheaper costs for lenders that will be shared with borrowers.  Barclays, Lloyds, RBS and Nationwide are all taking part in the new government backed scheme.

Mark Harris, chief executive of mortgage broker SPF Private Clients, remarked on the recent interest rate cuts by some lenders, “If other lenders follow suit, it should have a positive impact on the housing market, with cheaper deals.

“Although the funding for lending scheme has only recently launched, we expect to see mortgage rates start to fall in coming weeks.

“Increased levels of lending would boost the market, so with 100 lenders invited to participate, there should be better rates and more choice of deals. The early signs are encouraging.”