Mortgage rates are likely to drop even further before the end of the year, providing some much-needed festive cheer for landlords.

Two big lenders – HSBC and Barclays – have already announced rate cuts in the last week. Among HSBC’s key reductions in the BTL market is on its two-year Fixed Fee Saver at 60% LTV, while Barclays made changes to its purchase-only, remortgage-only, purchase and remortgage, and customer reward ranges for residential borrowers.

This includes a two-year fixed purchase only deal at 60% LTV with an £899 fee which has fallen to 4.23% and the fee-free option which has dropped to 4.45%.

Analysts report that these rate cuts are a strong signal the market is gradually moving towards stability after a challenging few months for both lenders and borrowers.

SWAP rates

Jeni Browne (pictured), business development director at MFB, explains that SWAP rates spiked after the tumultuous Budget week and Donald Trump’s US election win, forcing up mortgage interest rates. However, the markets have since calmed down, meaning rates are softening again.

“This is great news for homeowners and landlords alike, as lenders consistently like to pass these reduced costs down to mortgage borrowers as soon as possible,” she tells LandlordZONE.

“Landlords can expect fixed rates to decrease a little more over the next few weeks, which is exactly how we want to finish this turbulent year.”

The Bank of England cut interest rates from 5% to 4.75% earlier this month - the second reduction this year. However, higher than expected inflation figures have reduced the chances of another base rate cut next month, while cutting interest rates may have relatively little impact on pricing of fixed-rate mortgages in the short-term.