Mortgage rates hit new lows. If you’ve got a mortgage … get it fixed!

 

 Can you really afford to be this guy?

 

It would appear that the mortgage market is defying the economic pressure being felt across the majority of the financial world.

	July 2016	January 2017	July 2017
Average 2-year fixed rate	2.55%	2.31%	2.26%
Average 2-year tracker rate	2.01%	1.98%	1.82%
Source: Moneyfacts Treasury Report.                                                        Compiled 10/07/2017

Re-mortgaging is on the rise across the country with London jumping to an eight-year high. Customers are looking at two, three, five and ten year fixed rate deals. According to the latest Moneyfacts UK Mortgage Trends report, the rates are currently standing at 2.26% and 1.82% for 2-year fixed rate and 2-year tracker rate respectively. This means that there is intense competition for banks to retain customers by offering the best re-mortgage deals to their customers. As you can see from the table below the figures are markedly reduced over the past year.

 

What affects mortgage rates?

The price of a mortgage rates depends on several factors, but the main one is how cheaply banks can find money to lend to customers. They get this money from savers or borrow from other banks on money markets at a certain rate known as a ‘swap’ rate. Generally rising SWAP rates has resulted in mortgage rate also rising but it seems that at the moment this is having little bearing as they are still falling.

What is the difference between fixed and variable rates?

A fixed-rate mortgage has a fixed interest rate for the period of time you choose, either two, three, five or ten year (the longer the period the higher the costs). After this initial period the mortgage then has a variable interest rate which are governed by the Bank of England or movements in the markets.

Variable mortgage rates can vary during the mortgage term, meaning borrowers will not have the security of knowing how much their repayments will be every month.

Effect on the difference between fixed and variable rates?

In case interest rates decrease any further which may make the repayments cheaper, it may mean that a variable rate mortgage may be better for you.  However, it is not all about the rate you also need to take into account any fees, such as arrangement fees or early repayment charges.

For independent mortgage advice either call us on our Freefone number 0800 193 1066 or click on the mortgage enquiry button opposite.