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Despite overall mortgage rates seeing a rise as the base rate is expected to increase next month, the Bank of England's Credit Conditions Review shows that it's not all doom and gloom for borrowers. Their figures show that higher loan-to-value (LTV) mortgage rates are still going down, which is good news for those with a 10% deposit.
The average quoted household interest rate in March stood at 2.21% for two-year fixed 90% LTV mortgages, which marked a decrease of 12 basis points since August 2017. Unfortunately, this was the only LTV tier that saw a decrease, with most having seen some increase since August.
Recent months have seen a rise in remortgaging activity, which the report suggests is due to a combination of continuing competition and the prevalence of two-year deals that necessitate frequent remortgaging. Overall mortgage lending, meanwhile, grew at an annual rate of 3.3% in February, in line with the average over the last two years.
The report also looked at unsecured credit, with interest on the average unsecured loan of £10,000 remaining unchanged at 3.79%, which sees quoted rates for personal loans remain near historic lows. Elsewhere, there has been some reduction in the availability of credit, as exemplified by the average interest-free term on balance transfer credit cards falling to 27 months. Demand for consumer credit remains robust nonetheless.
What this all means is that people are still looking for loans, whether for a mortgage or to pay for a car, and providers are having to weigh up increasing costs – due to SWAP rates rising – with the potential loss of business that results from having uncompetitive rates. This makes life harder not just for companies, but also consumers, as more research will be required to find that one provider that has not yet upped their rate and offers the deal you want.
Unfortunately, things aren't likely to improve anytime soon, with lenders expected to only become more risk-adverse. That's why, whether you're after a new mortgage or simply need a new credit card, now's the time to look around and pursue the best available deals.
Our Best Buy charts can be a great starting point, with the most competitive providers sitting proudly at the top. Why not look for yourself?
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