Are you thinking of buying a property or remortgaging to fix your rate, release capital or reduce your monthly repayments? Our advice is not to let the forthcoming General Election, already set for 7 May 2015, delay your decision. Interest rates can go only one way, upwards, and, according to the mortgage market, there is a possibility that they may do so before next May.
Two year fixed rates below 2%, five year fixed rates below 3%
The latest Moneyfacts UK Mortgage Trends report shows that the average two-year fixed rate mortgage fell by a 0.13% last month to just 3.39%. If you have significant equity in your home or a sizeable deposit, the lowest two-year fixed deal on the market offers borrowers with a 40% deposit the chance to secure a mortgage at a rate of just 1.49% (details here). The best 5 year fixed rate at the same loan to value ratio would cost 2.59% (details here).
Competition for your business
Mortgage lenders are currently offering the best deals you are likely to see for some time, if ever again. Some of this is to do with having to hit lending targets by the end of the year and needing to offer attractive rates to make sure that sufficient mortgages complete before Christmas. Another factor is the imminent rise in the Bank of England Bank Rate (also known as the ‘base rate’).
Current homeowners who already have a mortgage are likely to be on a good rate. Many are on their lenders’ standard variable rate (SVR) – the rate that mortgages tend to revert to after their initial deal period (e.g. 2 year fixed rate) comes to an end. These also are at historic lows, which means that customers have little incentive to search for a better deal as they are already enjoying a great rate where they are. But, that will all change when the base rate rises. Lenders’ variable rates will increase and customers on SVR will be able to leave without any early repayment fees that would have been due during a fixed rate period.
So mortgage lenders are having to offer very competitive rates currently because they do not want to risk losing their existing customers when the base rate rises and they start to look around the wider market for a better deal. By cutting their rates so dramatically, they are already standing out from the crowd and will appeal to both new home buyers and remortgagers alike.
When will rates rise? Possibly before the May 2015 General Election
- Howard Archer, at IHS Global Insight, forecasts a rise in February 2015 and says: ‘furthermore, it now looks far from inconceivable that the Bank of England could act before the end of 2014’
- The CEBR forecasts an early 2015 rise
- Capital Economics forecasts an early 2015 rate rise
- The IMF suggests an early to mid-2015 rise for the UK
These low rates won’t be around forever, and when the base rate does rise mortgage rates will quickly follow. Enquire about these low rates now, whether you’re thinking about buying or are starting to think about remortgaging to a fixed deal that will give you peace of mind from any interest rate shocks.
Private Finance provides first-class independent mortgage advice to suit your requirements.
Founded in 1999, it has established relationships with the key lenders in the UK mortgage market, including those who do not have a high-street presence. It arranges bespoke mortgage solutions for its clients. It works quickly and efficiently on your behalf, leaving you free to get on with your life. Its service is individual; the latest technology is used without compromising its commitment to personal service.
Whether you are acquiring a property or looking to remortgage an apartment or a house, Private Finance can help. Specialising in the arrangement of larger property loans, its experienced mortgage finance professionals have access to the whole of the market and provide a tailored one-to-one advisory service, delivered face-to-face or remotely to fit your circumstances, allowing you to finance your property in a convenient and stress-free manner.
Email email@example.com or call 0800 980 8777.