“If nothing changes on that front, if people's expectations of bank rate over the next two to five years remain unchanged, then bank rate reductions will only have a very modest effect on mortgage rates, other things equal,” Gardner says.
“So the main thing is what happens to expectations of bank rate. And if expectations don't move significantly, then the bank rate reductions themselves will have only a modest impact on mortgage rates in terms of fixed rate mortgages.”
Duncombe says the long-term expectation is that rates will continue to fall, albeit not significantly.
“There isn't a smooth glide path towards lower rates; there will be bumps,” he says. “It's very likely that at some point rates will nudge back up again.
“The long-term expectation is that rates will continue to fall slightly from where they are now. However, most of the expectations of where the base rate will go have already been factored into the fixed rates that people are paying today.
“It's likely that at some point, fixed rates will nudge back up again. But the long-term expectation is that rates will fall somewhat, but not significantly, from where they are today.”
Chloe Cheung is a senior features writer at FT Adviser
