Sansome & George’s mortgage advisers, The Mortgage Advice Bureau comment on the effects of the lowest fixed rates the mortgage market has seen for over 5 years:
As expected the Bank of England’s Monetary Policy Committee followed a familiar pattern in February with its decision to maintain the Bank of England base rate at 0.5% and keep the programme of emergency funding in the form of quantitative easing unchanged at £375bn.
The base rate has been at this low level for almost four years and there are no signs that this will change anytime soon. Indeed, many forecasters are now suggesting that the base rate will remain unchanged until 2015 and possibly longer.
The government programme to stimulate lending in the wider economy - Funding for Lending (FLS) - does seem to have kept the rate war within the mortgage industry raging on, and we have continued to see further falls in average interest rates over the last few months.
At the beginning of February the average 2, 3 and 5 year fixed rates stood at 4.11%, 4.36% and 4.14% respectively - the lowest levels since our records began. When the FLS initially launched, the most attractive rates on offer were still targeted at those with substantial deposits. However, we are now seeing increasingly attractive rates higher up the loan to value (LTV) curve.
For example, headline 2 year fixed rates are now available at below 3.50% for those with only a 15% deposit, and under 4% for a 5 year fixed product. For those who do have substantial deposit and or equity of 40%, borrowing is even more attractive with 2 year deals available under 2% and 5 year deals under 3%.
Borrowers remain increasingly focused on fixed initial rates, with more than nine in ten of our borrowers electing to fix during both December 2012 and January 2013.
Almost all lenders will be looking to increase their overall level of mortgage lending this year and, as a consequence, we fully expect to see continued healthy competition in the market, benefitting not only house buyers, but also those looking to refinance existing arrangements.
To see if you could take advantage of these low rates, or to discuss your circumstances in more detail, call us and arrange a without obligation discussion.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
