Combination of factors likely to drive further reductions

Falling funding costs, intensifying competition with lenders that have already cut rates, and the traditional summer boost are likely to prompt more lenders to reduce rates this week.

In its latest rate cuts on Friday 26 June, Nationwide reduced rates for new and existing customers across two, three, five and 10-year fixed rate products by up to 0.25%.

Its lowest rate of 4.19% is available for a two-year fixed rate home mover deal for those with a 40% deposit and paying a £1,499 fee. The rate is the lowest seen since March and follows several rate reduction announcements from Nationwide during June.

The Mortgage Works, part of Nationwide, has also cut rates by up to 0.25 percentage points, also the third time the company has cut rates this month. Skipton Building Society cut rates by an average of 0.18%. Barclays has also recently reduced rates.

Buy-to-let cuts also announced

Meanwhile, in the buy-to-let market, Fleet Mortgages also announced rate cuts, lower product fees and product enhancements on Friday, with rates reduced by up to 0.30 percentage points across its two-year fixed-rate 75% LTV products with a 3% fee.

The fall in swap rates, in particular, is putting pressure on lenders. Two-year swap rates have dropped by almost 20 basis points over the past month, and five-year swaps have fallen by around 15 basis points.

Lenders are also sharpening their claws to snare those looking to complete deals over the summer as the housing market heats up.