Mortgage rates at a historic low

Mortgage rates at a historic low

With the biggest cuts to mortgage rates in 16 months, whether you’re looking to buy or remortgage, the market has some great deals available for borrowers this autumn…

According to data from Moneyfacts, the mortgage market has seen the greatest decline in a single month since May 2020 and average rates for two and five-year fixed deals have fallen for the third month in a row. Read on to find out how this could benefit you.

First time buyers can benefit from low deposit, low rate deals

The past six months has seen a steady return of low-deposit deals in the 90-95% loan-to-value (LTV) space, meaning budding buyers only need to scrape together a 5 or 10% deposit to make their dreams of homeownership a reality.

As lenders continue to compete with each other to attract first time buyers to the market, mortgage rates in this LTV bracket are being continuously slashed – meaning significant savings on your monthly repayments. With average rates for a two-year fixed falling to 2.85% and five-year fixed deals cut to 3.23% this is a great sign of things to come as up until now, rates were traditionally higher for borrowers with a low deposit to offset the risk to lenders.

More rates available under 1%

It’s not just first time buyers who are benefitting from rate reductions; existing homeowners may want to consider their remortgage options following an influx of sub-1% mortgage deals as the lender rate war intensifies.

Whilst rates below 1% are available for those buying a property, the lowest deals will be found within the 60-75% loan-to-value tiers, typically for those looking to remortgage with significant equity in their home. Some of the biggest high street lenders have joined the fray to offer the best rate in the market, including two-year fixes at 0.84% and 0.87% from TSB and Nationwide respectively, and a five-year fix at 0.96% from HSBC, followed closely by NatWest at 0.98% as reported by Which?

Explore the latest remortgage deals available. 

Things to consider

Although increasingly low rates can only be a good thing for your bank balance when it comes to making those monthly mortgage repayments, there are a number of things to consider when taking advantage of the deals on offer – namely, how do I compare the different products available to understand the true cost of the deal? How long will these rates be around for and what are the next steps to securing a deal?

  1. First things first – whatever your circumstances, it is essential that customers nearing the end of their initial fixed rate period take action and review their remortgage options to avoid overpaying on their lender’s Standard Variable Rate – (the rate you move on to once your fixed deal comes to an end). Research from Moneyfacts suggests that nearly half of homeowners surveyed remain on a lender’s Standard Variable Rate rather than taking advantage of the lowest rates on record – costing them an average of £3,528 more each year. Countrywide Mortgage Services can compare 100s of remortgage deals from a wide range of lenders to help you switch to a better deal and benefit from some serious savings.
  2. Secondly – these rates may not be around forever. Whilst there are currently no signs of mortgage rates levelling off, there will come a point where these historic lows are no longer sustainable for the lenders. The availability of sub-1% deals in particular will be heavily influenced by the wider economy over the next few months. At the time of writing this article, inflation stands at 2%. If this were to rise substantially then the Bank of England’s Monetary Policy Committee could look to increase its base rate from 0.1% which in turn could have a knock on effect on how lenders price their current mortgage deals.
  3. The final takeaway to consider stands contrary to this entire article; however it’s an important one to bear in mind: attractive low rates aren’t the only thing to look for when searching for the ‘cheapest deal’. You need to look at the overall cost of the mortgage product, factoring in additional fees, lender criteria and the length of time (mortgage term) you wish to borrow for. In addition, although you may feel it prudent to lock in a low rate for longer and plump for a five-year fix over a two-year (especially as the rate gap has closed between these products over the course of the last few years), there are factors such as higher ‘early repayment charges’ associated with these products which you may not have considered. A Countrywide Mortgage Services consultant can help you understand the bigger picture, explain these overall costs (including potential savings) and find the best deal for your individual circumstances.

Speak to an expert

Contact your local Countrywide Mortgage Services consultant today for a review of your options and to explore the range of deals on offer across the market.

A fee will be payable for arranging your mortgage. Your Consultant will confirm the amount before you choose to proceed.
Countrywide Mortgage Services and Countrywide Insurance Services are trading names of Countrywide Principal Services Ltd which is authorised and regulated by the Financial Conduct Authority (Firm Registration Number 301684). Registered Office: Countrywide House, 6 Caldecotte Lake Business Park, Caldecotte Lake Drive, Milton Keynes, MK7 8JT. Registered in England no. 01707341.