February 25th, 2015
Since the start of the year mortgage rates have continued to fall offering borrowers record low rates and cheaper fees.
Suggestions from market experts indicate that the Bank of England (BoE) will keep interest rates low for longer than expected, and competition between lenders has resulted in mortgage costs being pushed down.
According to the BoE, both two and five year fixed rate deals have fallen since autumn last year. The figures revealed that in January, individuals with a deposit of 25% were able to secure rates on average 0.2% less than in October. While borrowers with as little as 5% deposit can benefit further, as five year fixed deals at 95% have fallen by 0.5%.
One of the best rates on the market at the moment includes HSBC’s 2 year fixed rate of 1.19%, with a 60% loan to value. The cheapest five year fixed rate is First Direct’s 2.28% with a 35% deposit.
This is great news for contractors looking to buy their first property, relocate to a bigger house or simply re mortgage. They will have the chance to access cheaper deals with the option of locking their payments at a low rate in advance of the imminent base rate rise.
Plus, contractors can benefit from the rise in decade long mortgage deals. There is now the option to fix payments at a record low rate for up to 10 years, offering financial security for the long term. If that wasn’t enough, lenders are additionally dropping their arrangement fees; therefore the total cost of mortgages is going down.
Mortgage brokers believe further record breaking deals will appear in the next few weeks with some experts predicting 2 year rates to fall below 1%, and five year rates to fall below 2%.
Taj Kang, Contractor Calculator’s mortgage expert, welcomed the era of record-low rates with the following comments,
‘Given the stricter way in which all borrowers, not just contractors, have been assessed when applying for mortgages since last year, the fact that mortgage funds are the cheapest they have ever been is a welcome relief to many. Mortgage borrowing still isn’t easy to obtain given the strict guidelines for lenders around affordability, but for those who do get their mortgages agreed, it is inevitable they will have a lower mortgage payment than the equivalent borrowing as recently as 2 months ago.’
The reason for record-low deals could be because of the changed outlook on interest rates. Economic forecasters believe the urgency for a base rate increase has diminished as the recent inflation report shows low inflation, slow world growth and a slump in oil prices. The Bank of England Monetary Policy Committee announced at the beginning of the month that the historic 0.5% will be held. The immediate prospects for cheap borrowing look very positive as a result.
Article By: Simon Butler, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080