Some mortgage lenders have made ‘modest’ cuts to their interest rates, according to independent mortgage expert John Charcol.

This follows the news yesterday that the Bank of England is keeping the Base Rate at 0.5 per cent for seventh consecutive month.

Explaining the reasoning behind mortgage rates being cut, Ray Boulger, senior technical manager at John Charcol, said: “Seasonal factors resulted in August being, as usual, a relatively quiet month for mortgages – even by this year’s standards – and it was the first month for a while that some lenders failed to hit their lending targets.

“This, coupled with lower Libor and swap rates, has resulted in some lenders making modest cuts in their mortgage rates which can only be good news for consumers.”

With house prices showing signs of recovery in the past few months, Mr Boulger said: “The longer that prices keep rising, the more confidence returns to potential buyers, and the expectation that interest rates will remain low for longer than most people expected prior to last month’s Monetary Policy Committee meeting is good news for the housing market, although our severe economic problems are still acting as a dampener to significant price increases.”

But, Mr Boulger also stressed the importance of borrowers currently on tracker or discount rates retaining the ability to switch to a fixed rate mortgage without incurring early repayment charges (ERC) and suggested choosing mortgage providers that offer these deals.

“HSBC, Woolwich and Abbey are among lenders which offer such deals with no, or a low, ERC, and all of Nationwide’s trackers have a droplock option, allowing its borrowers to switch to any of its fixed rates without incurring an ERC,” he said.

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