The average interest rate on a 2-year fixed rate mortgage is nearly 0.4% lower than it was 12 months ago, according to data released by the Bank of England this week.
Data shows that the rate available to those with a 25% deposit is currently at an average of 2.01%, down from 2.38% in February of 2014, representing a 15% drop as the current mortgage price war intensifies.
The trend continues in other areas also, with the average rate available to those with just a 10% deposit also falling by over half a percentage point, to 3.79%.
“Mortgage borrowers can take advantage of some of the lowest rates seen in many a year at present” said Andy McBride, Business Development Director at niche-broker Contractor Mortgages Made Easy.
“Since the Base Rate fell to 0.5% six-years ago, the rates available today are just above half of what they were back then, thanks to a period of deflation of late. This has meant less pressure on the Bank of England to look at increasing rates, and therefore a little more surety amongst borrowers that there will be no immediate rise.”
That trend looks to continue over the coming months, ahead of May’s General Election, and the interim three month period could see some unprecedented value.
“The coming months prior to the General Election will surely be a real purple patch for mortgage borrowers” adds McBride. “As lenders reach the end of the financial year, there will inevitably some sizeable lending reserves still untouched following a turbulent period last year after the Mortgage Market Review.”
“Lenders will, therefore, look to introduce short-term ‘flash’ rates to attract business in certain areas, such as the recent Halifax sub-3% fixed rate at 90% loan-to-value.”
“This could see some of the very best value in the market ever seen, as lenders and borrowers alike look to take advantage of a period of calm before the potential storm after May.”
Banks have lending targets in each risk area, and a responsibility to both shareholder and regulator alike to ensure that they are seen to be lending responsibly.
“A change of Government could well lead to a period of uncertainty for many banks, as nobody is quite sure what this would mean in the short term for interest rates. They will, therefore, look to conduct as much business as possible prior to this, to enable them to carefully monitor the market before leaping back in later this year.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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