Coles said the mortgage market is being driven by rate expectations further down the track, which have “fallen dramatically” since the surge that was powered by the 'mini' Budge.
She continued: “As a result, the market now expects the base rate to peak at somewhere around 4.5 per cent or 4.75 per cent, before falling back as the recession takes hold. It means it doesn’t need to price fixed rates so high. Mortgage rates could fall further from here, but it’s not guaranteed.”
Mortgage approvals have also been falling, which according to some brokers has put pressure on lenders to offer more competitive deals in an effort to avoid sales dropping off in the lead up to Christmas.
In October, mortgage approvals fell 11 per cent, their lowest level since June 2020 when the UK was battling with Covid-19.
Approvals for house purchases are an indicator of future borrowing. They fell from 66,000 in September to 59,000 in October.
Net borrowing of mortgage debt by individuals also decreased in October, from £5.9bn to £4.0bn, according to the Bank of England’s latest money and credit report.
Adviser at firm Ash-Ridge, Jane King, said at the end of last month a handful of lenders had told her “that purchase applications are almost non-existent so they need to start getting competitive again”.
ruby.hinchliffe@ft.com
