Even as the interest rate stays the same, lenders are offering more affordable fixed-rate deals.
On 6 November, the Bank of England voted to hold the interest rate at 4%. For now, homeowners on tracker mortgages will see no change in their monthly repayments.
Meanwhile, if you’re thinking of securing a new mortgage, you’ll be encouraged to know that major lenders are trimming their rates as they try harder to attract customers. This follows the slowdown of the housing market and predictions of a cut in the Bank of England’s base rate by the end of the year.
Such a “mortgage price war” is welcome after relatively high mortgage rates for much of the past decade. This November, the average rate for a two-year fixed mortgage has decreased from 4.75% to 4.59%, according to Uswitch. And the average five-year fixed deal decreased from 5.04% to 5.03%. (In both cases, the rates are for a 75% loan-to-value (LTV) mortgage, so customers need a deposit of 25% or more.)
What are some of the best deals?
Nationwide is offering sub-4% rates to all types of borrowers. Both existing and new customers seeking to move home can get a rate of 3.64%, the lowest fixed rate since 2011. To be considered, you must have at least a 40% deposit and pay a fee of £1,499. Please note: this rate calls for a minimum loan of £300,000. If you need a smaller loan, the standard deal is 3.69% and the fee is £999.
Santander for Intermediaries has announced a 4.64% five-year rate for people looking to buy a property. Again, you need at least a 40% deposit and, this time, pay a £999 fee. Please note: this rate is available for a maximum of £1.5 million.
Barclays has cut fixed rates by up to 0.1% and now offers a 4.01% five-year fix with a £899 fee for people with at least a 40% deposit.
Other big lenders, including NatWest and HSBC, have also lowered their rates across fixed-rate mortgage deals.
Will mortgage rates come down over the next months?
Many financial analysts think policymakers at the Bank of England could cut the benchmark rate in December. If this happens, mortgage rates may drop again. However, it depends on what comes out of the Budget, as well as trends in inflation and wage growth. In other words, nobody can be sure.
As always, spend time carefully researching mortgage deals, including those from high street banks and building societies. You want to have an idea of what’s available so you know a good deal when you see it.
If you’re remortgaging, you can do this up to six months before your mortgage ends. Talk to your current lender about what they can offer, then compare their deal with those of other lenders.
You might find it helpful to talk to a mortgage broker such as Trinity Financial. They can search the market for the most competitive deals, including fast mortgage offers, interest-only mortgages, and mortgages for professionals.
