Despite the rise in inflation that is affecting the price of groceries and the cost of living, mortgage rates have fallen to the lowest level on record. A lack of activity in buy-to-let mortgage lending, following tax increases earlier this year, has left lenders competing heavily for business. This is an opportune moment for all those homeowners on SVR’s to lock in a low fixed rate and save hundred of pounds.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Competition is high for lenders
Tax rises for property investors is believed to be causing residential mortgage rates to remain at record lows, as lenders compete for business to fill the gap in their books from a lack of buy-to-let mortgage deals.
Lenders are increasingly desperate for new business and so they continue to drop their rates, with the average 2 year fixed rate now just 1.26 percent, according to Bank of England figures.
In July 2016, the average rate for the same mortgage term was 1.73 percent, showing a significant fall.
In April 2017, the first sub one percent mortgage hit the market and since Yorkshire Building Society promoted it’s 2 year fixed rate mortgage deal of 0.89 percent. Available to homeowners with a 35 percent deposit, this marked the lowest ever mortgage rate on record.
Wake up call to borrowers on SVR
Experts in the market suggest this continued period of low rates should be a wake-up call to those millions of homeowners that are still on lender’s SVRs (Standard Variable Rates).
SVRs often range from 3.75 percent to sometimes 6 percent, making this an expensive option for any borrower.
A £150,000 loan with an interest rate of 4.5 percent (average SVR) would cost the homeowner approximately £830. Borrowers with a decent deposit can save literally hundreds of pounds a year.
According to Moneyfacts, the average homeowner pays approximately £275 a year less than a year previously.
Mortgage Review
The best way to find out how much you could save is to get a Mortgage Review.
This compares your current mortgage against best-rate mortgage deals available to you.
Whilst mortgage rates are an important factor, mortgage fees are also important to build into the calculations.
Follow us on Twitter and LinkedIn for regular financial and mortgage updates
?