What are the best deals out there at the moment?
More sub-5% mortgages are becoming available, as Santander launches 4.64% fix. Banks and building societies have continued to improve their pricing and at least ten mortgage lenders are now offering sub-5% rates.
Santander for Intermediaries has just launched a 4.64% five-year fix available to borrowers purchasing a property. Applicants will need to have a 40% deposit to qualify, and the mortgage is available up to a maximum of £1.5 million, with a £999 arrangement fee and a free property valuation.
Nationwide for Intermediaries also has some competitively priced rates. The UK’s largest building society has a two-year fix at 5.24% and a 4.99% three-year fix, and the lender also has a two-year tracker rate at 0.14% over the Bank of England’s current 5.25% base rate. To qualify for these mortgages, borrowers will need a 40% deposit; there are £999 arrangement fees and maximum loan sizes of £1 million.
Mortgage lenders are doing more to stimulate the property market, which means some of the providers are offering cheaper rates to homebuyers rather than those looking to remortgage. Nationwide, Halifax and Santander are just some of the lenders pushing to attract more borrowers buying properties, with roughly 1.6 million people needing to remortgage between now and the end of next year, they are not short of people who need to refinance.
So in this climate, should I opt for a fixed or tracker mortgage?
Many of Trinity Financial's clients are taking tracker mortgages or shorter-term fixes. They hope rates will decrease and want the flexibility to lock into a new deal over the next year or two without paying high early repayment charges. Recent figures from Santander show most of its customers are taking five-year fixes, but the overall percentage has gone down from about two-thirds to 55%. This has led to an increase in its mortgage holders taking two-year fixes and tracker rates.
Will mortgage rates come down over the coming months?
With overall mortgage lending figures down, many lenders will be keen to continue to lower their rates and offer more generous acceptance terms. Some of the big banks have massive lending targets and have stressed that they are keen to do everything possible to tempt borrowers to take their mortgages.
And what will happen to interest rates?
Consensus is very mixed on whether we will get one further hike from the Bank early next month or whether rates have already peaked, with much of the fiscal tightening over the past year yet to feed through to the economy fully. According to private bank Arbuthnot Latham, Bank of England interest rate cuts are priced in for the latter half of 2024, when the focus will switch from inflation to stimulating growth.
What should I do if I need to remortgage soon?
To ensure you get the most competitively priced mortgage, assessing the market rather than simply taking the rate your lender offers you to stay is essential. With more competition in the mortgage market, lenders are undercutting each other, so it pays to shop around to get the best deal. There are ways homeowners can slightly lower their repayment shock if they are coming off ultra-cheap rates. There is potential to swap to interest-only or part interest-only as part of the Mortgage Charter or extend the term. If you have savings, you could get an offset mortgage to reduce the interest charged while still having access to the money if required.
Click here to view Trinity’s latest large mortgage loan best buy table.