People looking to move house or to get a foot on the property ladder may be able to take advantage of falling house prices and lower mortgage rates. According to John Charcol, fixed rate mortgage prices are coming down in price, while a Rightmove study reveals that property prices have fallen for the third consecutive month.

“The good news for borrowers is that two year swap rates (on which lenders base fixed rate prices) have finally fallen under the 5 per cent mark in anticipation of another rate cut, so fixed rates are now becoming much more competitive,” says John Charcol spokesperson Katie Tucker.

A number of lenders including Woolwich, Lloyds, Intelligent Finance, Cheltenham and Gloucester have reduced fixed rates by around 0.15 per cent, although tracker rates have actually increased by approximately the same amount this week, according to Ms Tucker. Despite this, trackers will continue to offer best value for many as the bank rate may fall to five per cent or even lower this year.

“Tracker mortgages are more popular at the moment. Some are offering very low rates for a percentage fee, which can be confusing, so have your broker calculate which mortgage deal is best value for your personal situation,” advises Ms Tucker.

Meanwhile, the Rightmove House Price Index reveals a 0.8 per cent (£1,968) drop in average asking prices in January compared with December, the third consecutive month of price declines. The annual rate of increase was just 3.4 per cent for the month, the lowest rate of growth since December 2005.

Commercial director, Miles Shipside, comments: “Some homebuyers are now able to find properties that have fallen into their affordability zone, and are bagging what they see as bargains against previous prices. Some properties have had their prices dropped by 10 per cent or more and are now within reach, satisfying some of the pent-up demand from previously disenfranchised buyers.”

The company claims that further interest rate cuts are essential, and that the banking sector needs to continue to improve liquidity if borrowers are to see further reductions in mortgage rates and better access to funds. However, “enough sellers seem to have dropped their prices to encourage potential buyers to look in larger numbers, suggesting we might see a more active market at this lower price level,” says Mr Shipside.

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