Several months after the Bank of England slashed the base rate to 0.25 per cent and lenders are still cutting mortgage rates on almost a weekly basis – but how low can they really go?
The experts say not a lot lower: lenders will continue to tinker with their cheapest rates, raising and lowering them by the odd 0.1 per cent here and there but it’s likely that if you get a mortgage at the moment, it’s going to be a pretty cracking deal.
The very best and cheapest deals on offer are for those with a substantial whack of equity to put in but there are competitive rates across the board, even for those with just a 5 per cent deposit.
It’s therefore worth thinking about remortgaging if you’ve come to the end of your deal and are sitting on your lender’s standard variable rate.
In spite of the Bank of England cutting the base rate in August, research from Moneyfacts out in October revealed that a quarter of lenders had still not passed lower rates onto homeowners on SVR.
Partly this could be down to the uncertainty caused by the Brexit vote in June and, indeed, mortgage brokers issued a warning to borrowers after Prime Minister Theresa May confirmed she would trigger Article 50 by March 2017, kick-starting two years of negotiation between Britain and the European Union to decide the terms of the UK’s exit.
Unless you have a good reason to take a two-year fixed rate, such as needing to move or expecting to have to sell your home, brokers suggested that five-year fixed rates might be a cheaper long-term bet.
Rates may stay low for the foreseeable future but if lenders are worried about the effect of Brexit, they are likely to make it harder for borrowers to get a mortgage by making their affordability and income tests harder to pass.
Whatever the right type of mortgage for your circumstances, shopping around and speaking to a good mortgage broker is a wise move.
Article by Simon Lambert & Sarah Davidson for ThisIsMoney.co.uk