Homeowners and prospective buyers could soon see lower interest rates on fixed rate home loans as financial markets signal growing confidence in a series of Bank of England cuts.

So-called SONIA swap rates, which set the figure at which banks borrow from one another, have been falling in recent days and these are expected to bring reductions on fixed rate deals.

A number of leading lenders, including the Halifax and Barclays, have already introduced reductions recently and there are expectations of more to come.

Riz Malik, Independent Financial Adviser at R3 Wealth, said: “With SONIA swap rates continuing to decline, we may see even deeper reductions in fixed-rate pricing. This will be welcome news for households looking to buy or remortgage.”

Emma Jones, Managing Director at Whenthebanksaysno.co.uk, told Newspage: “The downward spiral in swaps will likely translate into improved mortgage pricing in the days and weeks ahead. February is already looking far more positive than the false start that was January.”

But some urge caution. Adam Stiles, Managing Director at Helix Financial Partners, warns against premature optimism.

“The white-knuckle ride of recent times means we should always expect the unexpected. But naturally, when SWAPs drop, we hope lenders will follow suit with lower fixed rates,” he said.

Ben Perks, Managing Director at Orchard Financial Advisers, is more bullish, calling next week a potential game-changer.

“With swap rates trickling downward and the tantalising prospect of a base rate cut, lenders could be about to slash rates. This is a much-needed glimmer of hope for the mortgage market,” he said.

Meanwhile, Jack Tutton, Director at SJ Mortgages, suggests more cuts could be on the way, adding: “All signs point to multiple base rate cuts this year, possibly beyond the usual 0.25% reductions.

“If lenders react quickly, it will be welcome news for those coming off historically low pandemic-era rates.”