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Fixed mortgage rates fall to an all time low
According to Bank of England figures, Fixed rates have fallen as low as 1.07%, making them the lowest rates we have ever seen. Could this be your opportunity to lock in a great deal?
Mortgage lenders have been steadily cutting interest rates since the end of summer 2014, leading to the lowest fixed rates we have ever seen.
At the time of writing, Bank England figures show that for borrowers able to put down a 25% deposit on a home, the average five-year fixed deal is just 2.98%, while the two-year deal is as low as 1.99%.
These aren’t even the best rates. Home buyers can fix their mortgage at 1.07%, and less than 3% if you are prepared to fix for ten years. Depending on your circumstances, you may find these deals too long or short and, therefore, opt for the five-year fix at 25%, making them a good middle-ground for many.
The best rates go even lower than this. Homeowners can fix for two years at just 1.07% and up to ten years at less than 3%.
For some, those may feel too short or too long, but a five-year fixes at below 2.5 per cent – and one at just 1.99 per cent – might look a very tempting middle ground.
Just twelve months ago the prediction by some industry experts was that interest rates would start to rise towards the end of 2015 and into 2016 but so far we haven’t seen any indications of this. If anything, it was felt by some analysts felt that rates would rise after the general election but this hasn’t been the case so far.
This is because of low inflation, a slowdown in world growth, a slump in oil prices, and problems with the Eurozone to name a few.
With the fall in fixed rates, home buyers have been able to obtain so exceptionally cheap mortgages. Rates could still fall, but the time to act is now because these deals could disappear overnight.
Britain’s economic recovery could still be halted if base rates rise over the next few weeks, and meanwhile the oil prices are falling, prices of food are much more competitive and energy costs are reducing this has all contributed to inflation being pushed down to well below the 2% target.
The general consensus is that rates won’t rise until at least this time next year.
Meanwhile house prices are rising, and so there’s a renewed confidence in the housing market. We are now in the midst of a ‘sweet spot’ for mortgage rates, and if you do want to secure a cheap fixed rate mortgage now then you need to check the following:
Arrangement fees – work out if the cheap deal is actually cheap once you have paid the arrangement fee on top. It might be worth going for a slightly higher rate with a lower arrangement fee.
Long and short term plans – are you thinking of moving in a year or two or are you thinking of staying put? Can you be sure that everything will go to plan? A good five-year fixed mortgage will be portable, but check with your mortgage broker as you might need to borrow more money and your lender could turn you down. If you do have to pay a redemption fee, it could end up not being the good deal you once thought!
Talk to a us, as we will be able to advise you as to what you need in order to be prepared for your application but remember, low rates today will be here for a while, but once they have gone, they have gone!
Your home may be repossessed if you do not keep up repayments on your mortgage. Rates and offers are correct at the time of posting, May 2015.