The recent rate war in the mortgage market has witnessed lenders dropping rates to all time lows in light of recent speculation of an interest rate rise next year. In April, lenders had to contend with the new market affordability rules (as part of the mortgage market review or MMR), which resulted in reduced lending.
With the market adjusting to these changes and despite the prospect of a Bank of England rate rise next year, lenders are expected to introduce cheaper deals over the coming weeks to allow them to hit end of year targets.
Major lenders in the industry such as Barcays, HSBC and Nationwide Building Society have been the first to come out appearing more confident to offer leading deals in the market. Newcomers such as Virgin Money and established high street lenders such as Halifax and Lloyds Bank have also followed suit. Mortgage rates of under 2% (notably two year fixed), will become standard practice over the coming months with lenders locked in a price war which is set to intensify in the run-up to Christmas.
Some of the most attractive fixed rate deals have particularly been in the five year fixed rate market which has seen them plummet to an all time low. Lenders such as West Brom Building Society, currently offering a rate of 2.79% with a £599 booking fee or Metro Bank with a headline rate of 2.84% and a £999 fee. Such a deal would be an attractive proposition, giving a good rate and long term security over a medium period for buyers and for those remortgaging. However it is worth checking such deals are portable and can go with you if you decide to move home.
As the competition soars, the market is also witnessing higher LTV (Loan to Value) rates being cut. Recent examples include Halifax two-year range has witnessed 75% LTV products lowered by up to 0.2%, 75-80% reduced by up to 0.3% and a reduction of 80-85% products by as much as 0.30%. Furthermore, there have been reductions in their five year product range at 60% LTV, being reduced by 0.25%. This approach has also been adopted by recognised lenders including: Barclays, Accord, Nationwide, Skipton and Coventry Building Society.
Responding to these changing market conditions, such reductions across all LTV ranges are providing mortgage advisors with an increasing range of attractive products which can benefit both first time buyers and existing borrowers.
It’s important to remember the generosity won’t last forever and now is undoubtedly a good time to make the most of the current industry climate, with home rates reducing. Searching the market for the best mortgage lender and deal or even using a trusted financial adviser can help with the degree of complex marketing with the offer of better rates. Most lenders will let you apply for a rate, for example up to six months before you need it. But be wary of some of the hefty fees if you’re choosing a low mortgage rate. Providers such as HSBC, offer some of the most attractive rates, but fees on these products can reach up to the sum of £1,500.
With interest rates set to rise in the near future, now’s an exciting time to take full advantage of the current cheap deals on offer and this is good news for borrowers looking for larger mortgages, particularly if you are looking to purchase a larger property or switch lenders and move onto a better deal.