In a surprising turn of events for the mortgage market, Moneyfacts can reveal that average fixed rates have fallen dramatically in the last month – so now's the time to take advantage of them!
Figures from the latest UK Mortgage Trends report shows that the average two-year fixed rate mortgage fell by a considerable 0.13% last month, meaning a typical borrower could expect to pay a rate of just 3.39% for a two-year term.
Of course, there are some rates that are even lower, particularly if you've got a significant deposit to put down – currently the lowest two-year fixed deal on the market comes from Norwich & Peterborough Building Society, which offers borrowers with a 35% deposit the chance to secure a mortgage at a rate of just 1.89%!
A lot of providers are jumping on the low-rate bandwagon at the moment. The market is being flooded with product changes and new launches, with many mortgages having their rates cut significantly – Nationwide, for example, has cut its mortgage rates by as much as 0.60%, and others aren't far behind – so competition is most definitely on the rise.
But why? It's a clear reversal of fortune, as earlier on in the year, all signs had been pointing to mortgage rates rising in anticipation of a forthcoming change to base rate. But now, it would seem that this same factor is having entirely the opposite effect, with it serving to boost competition as providers strive to be seen as offering the best deal.
And it's all down to the remortgage market. Current homeowners will already have a mortgage and will probably be on a good rate, as many have been able to take advantage of record low mortgage rates since the financial crisis hit. Many are on their lenders' standard variable rate (SVR) – the rate that a lot of mortgage terms revert to after the initial deal period comes to an end – and these also are at historic lows.
That means they're not compelled to search for a better deal as they're already enjoying a great rate where they are. But, that will all change when base rate rises, as it'll push up lenders' variable rates as a result. That's when borrowers will start looking at alternatives, and because they're no longer on a fixed rate, they're not tied to their mortgage, either.
That's why providers want to offer such great rates, because they don't want to lose their current customers when they start to check out the wider market. And, even if they do lose a few customers, they'll hopefully recoup their losses by gaining new ones thanks to their rate cuts – it's all about preparation, and by cutting their rates so dramatically, they're already standing out and will appeal to the remortgage sector and new home buyers alike.
Isn't it time you got in on the action? These low rates won't be around forever, and when base rate does eventually rise, mortgage rates will quickly follow. So don't hang around! Take advantage of these low rates while you can, whether you're thinking of taking the plunge and buying that first home, or are starting to think about remortgaging to a fixed deal that will protect you from any interest rate shocks. Our best buy tables are chock-full of low rates at the moment, so keep an eye on things and you could stay on a low rate for longer.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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