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Lenders cut mortgage interest rates. Are the new products better than your current deal?
Lenders have been taking the axe to mortgage rates in the hopes of luring new customers. In fact, some deals on offer are the lowest they’ve been in years.
According to the British Bankers' Association (BBA), banks and building societies reported a significant drop in remortgage activity in May. The BBA said remortgage approval was 21,519, down on the average of 24,571.
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Lenders have reacted to this by slashing rates on a number of deals in the hope of securing business for the next few years.
It seems that many borrowers are hedging their bets by opting to stay on their lender’s Standard Variable Rate. Perhaps that is the most attractive option at the moment as fears of a Base Rate hike have faded.
Although experts are widely predicting interest rates to remain at the current low level of 0.5% until early 2012, there is a chance that borrowers may miss out on some competitive deals if they don't act within the next few months to secure a new mortgage.
Two and five-year fixed deals have dropped and competitive trackers are at record lows as lenders now battle it out to top the best buy tables.
Whether you’re an existing homeowner or a first-time buyer, knowing the mortgage market inside out could help you get the best deal. Take our test to see how your mortgage knowledge measures up.
Five-year fix
Yorkshire Building Society recently launched a competitive five-year fix at 3.99% for homeowners with a 75% loan-to-value (LTV).
The market-leading deal is sure to turn a few heads and perhaps even spur competition from other lenders. With this product, you are guaranteed to pay 3.99% until 2016 which is sure to be popular for those worried about what a Base Rate hike could do to their monthly mortgage repayments.
However, the product does come with a £995 fee so it is worth factoring this added expense when calculating the total cost of the mortgage.
Two-year fix
Woolwich has dropped its rates on a number of mortgage products in recent weeks. In particular, the two-year fix at 2.78% is a very attractive option for those with a 70% LTV. This product, however, does come with a hefty £999 fee.
Alternatively, Market Harborough Building Society offer a two-year fix at 2.75% that requires a 25% deposit. However, this mortgage comes with a high £1,995 fee.
Tracker mortgages
Top tracker mortgage have also dropped and remain appealing for those who wish to gamble on the fact that the Base Rate will stay low for some time.
One of the most competitive tracker deals on the market is First Direct's two-year tracker with an initial rate of 1.99% that requires 65% LTV and a £999 fee.
ING Direct also offers a two-year tracker at 2.39% but with a 75% LTV and a fee of £945.
Yorkshire Building Society is offering a two-year tracker at 2.49% with a 75% LTV with a low fee of £95.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
Mortgages - YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE. FAILING TO ADHERE TO REPAYMENT TERMS MAY RESULT IN PENALTY CHARGES AND AFFECT YOUR CREDIT HISTORY. Rates may depend on your individual circumstances
Loans - FAILING TO ADHERE TO REPAYMENT TERMS MAY RESULT IN PENALTY CHARGES AND AFFECT YOUR CREDIT HISTORY. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Rates may depend on your individual circumstances
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