The Bank of England Monetary Policy Committee said lenders were still banking huge profits on mortgages
Banks have kick-started a mortgage price war, ending four months of rate hikes.
In a report, the Bank of England revealed ‘some signs of easing’ in the home loans market after lenders made it more difficult to get a mortgage earlier this year.
Research by The Mail on Sunday found Barclays has in recent weeks cut rates by up to 0.16 per cent on its 75 per cent, 80 per cent and 85 per cent mortgages.
Nationwide and Yorkshire Building Society have also cut rates on 85 per cent mortgages.
Overall, the average cost of a two-year fixed-rate mortgage fell from a peak of 1.85 per cent in October to 1.83 per cent in November for borrowers with a 25 per cent deposit, according to separate data from analysts Bloomberg.
The rate had climbed from a low of 1.38 per cent in April after the market was rocked by Covid and by a surge in demand when Rishi Sunak axed stamp duty in July.
The average rate for a five-year fixed-rate mortgage levelled off at 2.02 per cent in November, having risen from 1.66 per cent in March.
In its report last week, the Bank of England Monetary Policy Committee welcomed the ‘stabilisation’ of the market and said lenders were still banking huge profits on mortgages. The minutes from its latest meeting said high demand and ‘operational constraints’ had pushed up prices.
Lenders have struggled to keep up with demand – with so many staff working from home and the task of carrying out mortgage valuations made trickier by social distancing rules.
The Bank of England report said lenders had also pulled back due to fears of a crash in the housing market. Banks axed their best deals and hiked prices to manage the flood of new customers and profit from the stampede for new homes after the Spring lockdown was lifted.
Experts welcomed signs that banks were starting to compete for customers again.
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