Bank of England comments about a “more aggressive” stance on base rate cuts, followed by repricing by major lenders, have prompted brokers to suggest these moves may lead to “low 3%” mortgage rates by the end of the year.

Central bank governor Andrew Bailey said it might be the time to become a “bit more aggressive” on interest rates if inflation continue to move in the right direction.

Bailey spoke in an interview with the Guardian ahead of its next rate setting Monetary Policy Committee meeting on 7 November.

His comments are a change of tone from an interview the governor gave to the Kent Messenger two weeks ago when he said he expected rates to come down “gradually”.

His intervention comes as major lenders such as Barclays, HSBC, Halifax and Santander all announced rate cuts today.

Money markets now price in a cut in Bank rate next month to 4.75% at a 96.5% chance.

“One simple interpretation of the governor’s comments is that it could now take an upside surprise to inflation for the Monetary Policy Committee not to cut rates back-to-back in November and December,” says Deutsche Bank strategist Shreyas Gopal in a note to clients.

Gopal adds: “Previously the guidance suggested that the burden of proof was on inflation to surprise to the downside for such a shift away from the ‘gradual’ pace of easing.”

The Monetary Policy Committee voted to hold bank rate at 5% last month, following a 0.25% cut in August. Its first reduction in four years.

Inflation came in at 2.2% in August, unchanged from July, just above the BoE’s 2% target.

John Charcol mortgage technical manager Nicholas Mendes says: “If the Bank of England cuts the base rate to 4.75% or 4.5% by the end of this year, it could significantly impact mortgage rates, though the exact timing and scale of these changes will vary among different lenders and products.

“Lenders typically adjust their offerings to reflect changes in the base rate, but there is often a lag as they consider broader economic factors, including funding costs and market competition.”

Swap rates, which are used to set mortgage prices, have fallen over the last 24 hours.

A two-year swap has dropped to 3.85% today from 3.91% yesterday, while a five-year swap is down to 3.60% from 3.63% over the same period.

SPF Private Clients chief executive Mark Harris says: “A more aggressive approach to rate reductions has been welcomed by the markets, with swaps falling on the back of the governor’s comments, which should feed through to even lower mortgage pricing.”

Mendes adds that the downward move in swap rates “has boosted lenders’ confidence, allowing them to reduce mortgage pricing while narrowing their margins to remain competitive.

“Lenders are likely to pass on these reductions promptly to attract new business and outcompete rivals, which can be a significant advantage for consumers.

Mendes points out: “If the base rate drops to 4.75% or 4.5% sooner than the market currently expects, it could provide a substantial boost to the property and mortgage markets, particularly after the challenges faced over the past two years.

“Given the competitive nature of lenders, if we see two rate cuts this year, I expect they will be quick to pass on reductions in funding costs to consumers.

“As a result, five-year fixed rates in the low 3% range could become available before the year ends.”