The mortgage market has been somewhat turbulent of late, from falling fixed rates to changing criteria and, of course, the rise in house prices. Yet we can finally resume some clarity in the form of the 2016 Spring Budget (released at the beginning of March), along with the long awaited stamp duty changes set to enter the market in April.
So far, spiralling economic confidence has caused household mortgage rates to fall for UK borrowers, hastened by increasing competition between lenders to capture business – evident in the dramatic plunge in rate prices across the market. Equally, the expectation of a base rate rise has also been set back significantly (with some market indicators now suggesting 2018) due to low inflation, slowing economic growth and the oil price slump. Consequently, fixed rate mortgages look set to stay low for the year, with lenders remaining keener to lend than ever.
Following these recent changes, you have probably been wondering what is likely to happen to mortgage rates, not to mention the future of your own mortgage as a result. Luckily, we’re here to shed some light, so you can determine the best option for your finances moving forward.
The best fixed rate mortgage deals
Fixed rates are undoubtedly appealing to borrowers as they offer the peace of mind of having a fixed monthly cost that isn’t at risk to fluctuating interest rates or market movement. Following the influx of fixed rate deals released at the end of 2015, the current market remains excellent for lending, with increasingly low rates and competition between lenders showing no sign of easing up. In line with this, your chance of accessing some of the lowest fixed rate deals on the market is still very possible –especially when you transact with a broker like Enness.
The current lender price war has resulted in some of the cheapest deals entering the market, with a variety of fixed rates available including:
- Coventry Building Society’s buy to let fixed rate at 1.99% for up to 65% LTV or 2.85% for 75% LTV with 2% or 5% early repayment charges respectively.
- 3 year fixed rate at 90% LTV with a rate of 1.99% from Platform, or 2.44% at 90% LTV for a 5 year fixed rate. Both come with a £99 arrangement fee.
- Platform also offers a 2 year fixed rate up to 90% LTV at 2.24%, for house purchases with a 10% deposit and £1,499 arrangement fee, which is currently the lowest rate on record from an intermediary.
- Leeds Building Society’s 10 year fixed rate mortgage at 2.75% for up to 65% loan to value (LTV) with a £1,499 fixed fee. The rate is portable, includes tapered early repayment charges and allows for up to 10% overpayments per year.
- TSB’s 10 year fixed rate at 2.89% for up to 60% LTV, although the lender did increase rates elsewhere to compensate for this cheaper deal.
Although the best rates are perhaps expected to require higher fees, in most cases, fee-free or low-fee options are still available when sought after by a broker. Equally, the bigger your mortgage, the more worthwhile it can be to pay a larger fee to secure a better rate, or vice versa. It is vital for borrowers, or their broker, to calculate the trade off between interest rate and fee to ensure the best solution for you.
Despite lenders advertising these rates, often it is very difficult to actually get them without clever negotiation, so we would always recommend using a broker to do so. This is something we have always been firm believers of, which the Telegraph has even outlined in their recent article, if you need a little more persuading. Our Managing Director, Hugh Wade-Jones, has also been featured in Spear’s, outlining the new breed of brokers bridging the gap on the market.
Why you should consider a remortgage
Now the previously expected base rate rise has been significantly postponed, there are a number of options you can consider given the current market climate. Even if you’re not looking to capitalize on low rates by buying a home, remortgaging is also of prime relevance, particularly if you’re nearing the end of your current mortgage term.
Now is the best time to reap the benefits of remortgaging to ensure you avoid hidden fees. If you opt for a longer term fixed rate now you are more than likely to end up paying less, especially if you’ve already rolled onto your lenders’ standard variable rate. Longer fixes allow for longer term security, with no need to remortgage in a short time when rates are likely to be higher and may result in incurring another set of expensive fees.
If you’re on a standard variable rate and have reasonable equity in your home, you should consider remortgaging, as a 5 year fix, for example, can offer the opportunity to lock into a low rate for longer and avoid extra fees and higher rates when the base rate rise eventually does occur. Equally a lifetime tracker mortgage can offer a fee/early repayment charge free option, ensuring your rate only rises if or when the base rate does.
In the current market, falling interest rates mean increasing fees remain the norm for many banks in order to recuperate losses, so the only way to capitalise on these without falling victim to high fees is by talking to a broker. Having a good broker in your corner is the best way for you to reap the benefits of the most lucrative deals unavailable to so many others. A broker has the knowledge, relationships and market-access to negotiate your case accordingly.
In line with this, although the aforementioned rates are indicative of current market activity, private lenders will not publish their rates, although we should emphasize the fact that their rates are often much more competitive.
At Enness, we pride ourselves in ensuring our clients are as informed and prepared as possible. So if you’re looking to secure a fixed rate mortgage while these conditions prevail, or if you have any questions on the future of mortgage rates, our expert brokers are at your disposal any time of day. Feel free to contact us below where a broker can chat through your options with you.