Mortgage rates continue to fall
Mortgage rates below 4% could be available soon
Plummeting Mortgage Rates Offer Hope
The video opens with mortgage broker James Nicholson explaining that mortgage rates have fallen lately, as lenders vigorously compete for business amid declining volumes. He notes lenders are fiercely battling to top rate-comparison sites, to maximize visibility and applications. Obtaining a sub-4% rate, long seen as an impossible threshold, now appears achievable within weeks.
Why Rates Are Dropping
James cites major UK broker Trinity Financial, which has reportedly advised lenders that current rates remain unenticing for most borrowers. Trinidad and other large brokers have insider visibility, via constant lender discussions, into imminent rate shifts.
Some lenders have already lowered rates near 4.25-4.35%, but most buyers want sub-4% loans, signaling more drops ahead. Hence Trinity pressed lenders to accelerate reductions, aware hungry borrowers await tempting low-4% deals.
The Power of Sub-4% Psychology
While fractionally under 4% lacks economic import, hitting 3.99% generates invaluable headlines. James believes the first lender crossing that media-magnetic sub-4% barrier will enjoy a publicity bonanza, as the housing market awaits this symbolic threshold.
He envisions lenders finessing rates to 4.99% by year-end, more for the public relations coup than extra revenue. Sub-4% conjures images of affordability, spurring fence-sitters to leap into the market.
Clues From the Bank of England
The Bank of England recently insisted near-term rate cuts remain unlikely, but James insists central bankers cannot tip plans too early. If August reductions were publicly signaled in July, home shopping would freeze, as buyers awaited better terms, crushing transactions.
The BoE must balance transparency, by law, with discretion to avoid roiling markets and inhibiting commerce. Hence policymakers preach patience, while quietly readying cuts.
Election-Year Pressures
The BoE also faces pressure from the ruling Conservative government to cut rates around 6 months pre-election, expected by mid-2024. This allows rate stimulus to positively impact growth, jobs, and housing activity heading into voting season.
While theoretically independent, the BoE is not immune to partisan concerns or hoping 4-5 2023 cuts drive a pre-election boom.
US Fed Drives UK Policy
Moreover, the Bank of England tends to follow the US Federal Reserve’s actions, given America’s global economic dominance. With the Fed planning to cut rates up to five times in 2023, the BoE will likely mirror policy to avoid currency and trade disadvantages.
The Fed moves, the BoE follows.
Swap Rates Declining
Even aside from BoE actions, swap rates are falling steadily, allowing banks to borrow cheaper to lend cheaper. These core funding rates dictate consumer shifts. Declining capital costs, within an already competitive landscape, will compel lenders to court borrowers with reduced mortgage rates.
They must balance thin margins against needing volume in weak markets. Dropping rates allures applications, preserves market share. Survival depends on spread-balancing.
A Sub-4% Winter
James consequently predicts a sub-4% thirty-year fixed rate mortgage by January 2024, as banks scramble for share amid residential slowdowns up to 20%. With contacts claiming lenders are nearly there, desperation will push someone over the psychological line.
No one wants to be last over the sub-4% chasm, where publicity awaits. But New Year revelation better maximizes media impact, when more eyes watch and read. Few notice over Christmas, but early January offers PR riches for the first dancer across the 4% pole.
Questions Remain
Thus James believes winter delivers 3.99%, barring an unexpected shift. He welcomes debate though on if and when this fabled rate emerges. Please Like this video to help the truth spread. And thanks for making 2022 this channel’s biggest year at nearly 4 million views. More great prediction content coming in 2023!