Coventry Building Society made an announcement about lowering mortgage rates which has triggered expectations of a possible mortgage price competition. This could lead to a situation where lenders might engage in a mortgage rate war in the upcoming days.

The decrease in borrowing costs to the lowest levels seen since before Liz Truss's unconventional mini-Budget speech has set the stage for a potential environment of competitive mortgage pricing. Interest rate swaps used to price fixed-rate mortgages have significantly dropped following the president's national tariff announcements. Short-term interest rate expectations have led two-year swaps to fall to 3.64%, the lowest since August 2022. Similarly, the rates for five-year swaps, crucial for longer-term deals, have also plummeted. Mortgage brokers anticipate that interest rates below 4% for homebuyers with substantial deposits could become the new standard.

The move by Coventry Building Society to reduce mortgage rates over the weekend has sparked discussions about a potential mortgage rate war that could save homeowners hundreds of pounds on their annual payments. Digital lender MPowered Mortgages has also joined in by lowering its rates by up to 0.21%, offering rates of 4.04% for those with a 40% deposit.

Experts in the field, such as Ray Boulger from John Charcol and David Hollingworth from L&C Mortgages, predict that several lenders may follow suit and cut their rates in the coming weeks due to the improved market conditions. The decline in swap rates has set the groundwork for adjusting mortgage rates to align with the new landscape. Halifax reported a slight decrease of 0.5% in house prices for March, primarily attributed to a slowdown in market activities following the rush to finalize purchases before the March stamp duty deadline.