![]() ![]() ![]() “So if you have cash available you may want to consider paying down part of the mortgage to access a better rate.” Mr Anderson said: “It can make quite a big difference to the amount of interest you pay over the term of the deal. For example a £160,000 mortgage on a £200,000 home would be a loan-to-value of 80pc.Ī lower loan-to-value and bigger deposit will unlock lower interest rates. “Spring to mid-2024 expectations of a sub-4pc rate will be on the cards as markets continue to price in a reduction to Bank Rate in future years.” How can I get the best rate for my mortgage?īorrowers who put more equity into a property make themselves less risky customers, increasing the chances a lender will be happier to offer them lower interest rates.īanks use the term “loan-to-value ratio” (LTV) to label how much they lend a borrower against a home. Two and three-year fixed rates also coming down to 4.5pc. Nicholas Mendes of broker John Charcoal says, “At the start of the year, we should see more lenders release sub 4.5pc five-year fixed rates, with best buys edging closer to 4pc. However, the market has proved to be unpredictable, and how long each household fixes will depend on their individual financial circumstances. Mortgage rates are predicted to have fallen by 2026, when they’ll be able to make the most of cheaper repayments. Borrowers coming off those deals and searching for a new rate are very likely to face higher rates.īrokers are suggesting a typical borrower should fix for two years – this would minimise the amount of time spent fixed on an inflated rate. This is because while fixed rates may be falling, the cost of borrowing is still inflated when compared with mortgages which were locked in two or five years ago. This means they are likely to face a steep increase in their payments when they reach the end of their current deal and take out a new loan. How long should I lock in a rate for?Īlmost half (around 45pc) of today’s homeowners with fixed mortgages are on rates agreed before the Bank Rate started to increase in December 2021. If you are locking in for longer than two years then be sure to check any repayment penalties which would apply should your circumstances change and you need to exit the deal early – these can run into the thousands of pounds. Consider the overall cost of the deal, including any fees and whether the lender will pay for a mortgage valuation and legal conveyance, which most banks do.” High fees can sometimes outweigh marginal savings on similarly priced interest rates.Īdrian Anderson, of broker Anderson Harris, said: “Don’t just look at the headline rate. It is important to remember that the lowest interest rates do not necessarily equate to the best deal. Borrowers will need at least a 40pc deposit. The best five-year fix for a borrower remortgaging is with Lloyds Bank at a rate of 4.23pc, with a £999 fee. ![]() Borrowers will need a 40pc deposit and must pay a £899 fee. Where can I find the cheapest interest rates?Īccording to Moneyfacts, the cheapest two-year fix for a borrower remortgaging can be found with Barclays at a rate of 4.6pc. Now it’s no longer rising, other market factors such as swap rates are impacting falling mortgage rates. Throughout the last year lenders passed on the majority of Bank Rate increases to mortgage customers as their own borrowing costs rose. The Bank’s next Rate decision will be announced on 1 February 2024. The Bank of England made 14 consecutive raises to its central interest rate, known as the Bank Rate, since December 2021 – a trend which has finally ended, as it’s held the Bank Rate at 5.25pc since August. Will mortgage rates rise if the Bank Rate increases again? The average two-year fixed rate is currently 5.95pc the average five-year fix is priced slightly cheaper at 5.57pc, according to analyst Moneyfacts. ![]()
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