This month, Independent Mortgage Adviser, Chris, looks at why more homeowners are considering a long-term fix on their mortgage rate, particularly in areas such as London and with the uncertainty of the economy at present. Read more, including this month’s BEST RATES, here.
This does not constitute advice and advice should be sought in all instances before acting on it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
10 year fixed rates offer security over the long term
Historically, 10 year fixed rate mortgages have not been popular with homeowners, due to the lengthy commitment and fear of having to pay the early repayment charges if life takes a different course.
However, in light of an unstable economy, more homeowners are seeking security for their finances and their homes. Therefore, fixing their mortgage rate over the longer-term is becoming a serious consideration for many.
In addition, as interest rates are so low, when comparing options over a 10 year period, homeowners are finding in many cases they can make significant savings, even if they did decide to change their mind and cough up any fees.
Are you planning on staying put in your home now for the foreseeable future? Would you like to have extra money in your bank each month from a reduced mortgage rate?
A mortgage broker can help to highlight what your saving could be as part of a Mortgage Review.
10 year fixed rates are increasing
Although the Bank of England kept their base rate at 0.25% in the last announcement, some lenders are choosing to increase their mortgage product rates anyway.
There are several factors affecting the pricing of fixed mortgage rates, but the primary factor relates to “swap rates” – the price a lender can buy money at, either from savers, other banks or money markets.
Swap rates not only fluctuate with actual changes to the base rate, but also in anticipation of future rate rises, as well as inflation.
Major economic and political events, such as Brexit also affect swap rates, as does the level of competition between lenders.
Whilst mortgage rates do remain competitive, some 10 year fixed rate products have increased recently as a consequence of fluctuating swap rates.
In addition, if house prices continue escalating due to the availability of low cost mortgages, the Bank of England are poised to take action. This could likely involve adding new costs to lenders, which could get passed onto the homeowner through increased mortgage rates.
When will the base rate rise?
The base rate is expected to rise now in mid 2018.
However, experts suggest that mortgage rates set by lenders will steadily rise in the interim due to wider factors, such as reacting to swap rates.
Competition between lenders is, for now, keeping a lid on the level that lenders can go to when pricing their mortgage products, as well as a stagnant housing market, which may mean rises are delayed.
If you don’t want to miss the boat though, speak to a mortgage adviser about your situation so you are aware of your options.
Mortgages for Doctors and Dentists
If you are looking to move house, or buy an investment property in the near future, keep an eye out every week for our Mortgage Monday – updated rates and best deals, including 95% mortgage options for first-time buyers.
Sample best rate mortgages:
TERM | TYPE | LAST WEEK'S RATE | RATE OF INTEREST | GREAT FOR: |
---|---|---|---|---|
2 year | FIXED - 65% | 1.23% | 1.24% | Saving money by remortgaging |
2 year | TRACKER | 1.19% | 1.19% | Taking advantage of low Bank of England base rate |
3 year | FIXED - 65% | 1.59% | 1.59% | Saving money by remortgaging |
5 year | FIXED - 65% | 1.74% | 1.69% | Saving money by remortgaging |
10 year | FIXED - 65% | 2.49% | 2.59% | Long-term reassurance of low monthly payments |
2 year | FIXED (Offset) - 60% | 1.29% | 1.29% | Saving money by remortgaging |
2 year | FIXED - 90% | 1.95% | 1.89% | First-time buyers with small deposit |
2 year | FIXED - 85% | 1.38% | 1.33% | First-time buyers with small deposit |
2 year | FIXED - Buy-to-Let - 75% | 1.84% | 1.84% | Property investors with a moderate deposit |
Average lenders | Standard Variable Rate | 4.54% (May) | 4.28% (June) | Flexibility |
Read more of Chris’s monthly mortgage features:
- When rates are so low, why are so many homeowners on SVR?
- Lowest mortgage rates ever, but are the fees worth it?
- Mortgage overpayments – when is it right for you?
Get a mortgage review with Chris
If you would like us to undertake a review of your current mortgage or compare various mortgage deals across the market, please contact Chris:
Tel: 01403 780 770