Mortgage deals are hitting record lows

Mortgage deals are hitting record lows as lenders compete against each other to have the cheapest rates. The last week has been typical of recent times with new, lower offers appearing almost every day.

On Monday Tesco bank mortgages have cut their deals by up to 0.5 per cent, while on Tuesday it was the turn of Chelsea and Norwich & Peterborough – both owned by Yorkshire building society – to cut rates by up to 0.4 per cent and 0.6 per cent respectively.

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Nationwide acted on Wednesday by reducing deals by up to 0.5 per cent, and yesterday Lloyds cut rates by up to 0.25 per cent and the Halifax – also part of Lloyds Banking Group – made a 0.6 per cent reduction. What’s going on? Should borrowers be snapping up these new deals or waiting for even better offers?

“We are currently seeing lenders outbidding each other to offer the lowest possible deal on the market to grab the headlines,” said Charlotte Nelson of the data provider Moneyfacts. “This is because many lenders are preparing for the eventuality of a base rate rise and looking to gain new customers now in a hope of recouping any losses that will occur later on.”

Mark Harris, chief executive of the mortgage broker SPF Private Clients, agrees. He said: “With mortgage rates already at record lows, it is hard to see how they could get any cheaper. But swap rates are falling and lenders are keen to do strong volumes of lending before any uncertainty surfaces around the general election.”

He believes it is only a matter of time before five-year fixes fall below 2 per cent. “These really are astonishing rates and anyone in the market for a fixed rate over the next few months will be spoilt for choice.”

‘Today’s prices have never been bettered in modern times and given that a base rate rise is inevitable at some point, it is unlikely they will be surpassed in the years ahead.

‘Lenders have begun the year with a strong appetite for growth, and newcomers are going head to head with established names to launch attractive new deals.’

Bank of England data shows that a typical two-year fix has dropped from 2.37 per cent to 2.01 per cent over the past 12 months.

Would you move your mortgage for £1,000? Lloyds offers new big incentive for remortgages and first-time buyers

Lloyds Bank has launched a cashback offer to tempt people with remortgages and first-time buyers.
The bank, recently dealt a blow to borrowers by imposing restrictions on its Help to Buy mortgages, is offering £1,000 cashback on two-year fixed rate remortgages or up to £700 for first-time buyers.

However, as is often the case with such eye-catching deals, the rates are not the keenest on the market, on top of which you will need one of its current accounts to get the best deals.

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What would happen if the base rate was cut to 0pc – smart money on repaying your mortgage?

What’s best: repaying your mortgage or borrow even more to invest in property?

Should you use today’s low rates to clear your mortgage? These calculations suggest you should borrow and invest, and maybe even go into buy-to-let

Your home is rising in value. You’re sitting on a fortune in equity. And, at the same time, mortgage interest rates are at their lowest in history and set to fall even further.

So what should you do?

On the one hand is the prudent path of paying down your mortgage as a top priority.

With interest rates so low you should be shot of your debt all the sooner. That will give you a fantastic financial headstart, and free you up to prioritise other aspects of your finances, such as putting more into your pension.

On the other hand is the temptation afforded by very low rates and the growing equity in your property. Surely now is the moment to take a little risk? Why not borrow a little more, and go into buy-to-let? After all, what’s the point in paying down a mortgage when it costs so little?

Do not be tempted to take the money and invest it. You’ll have to work hard to get the same level of return on your cash and, as Mr Hollingworth points out, you’ll have to pay tax, too.

In terms of the effective return on cash, overpaying a mortgage at a rate of 3pc could only be matched by a gross savings rate of 3.75pc for basic rate taxpayers and 5pc for those paying the 40pc, higher rate of tax.

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Don’t gamble. Do the sensible thing and pay down the debt you already have. You’ll sleep better at night knowing how much money you’re saving every single day, without even having to lift a finger.

The number of homes repossessed by lenders last year fell to their lowest level since 2006.

The Council of Mortgage Lenders (CML) says repossessions fell by 26% to just 21,000, with mortgage arrears also falling to an eight-year low.

The improvement was attributed to the rising levels of employment and continuing low interest rates.

But the CML warned that more homeowners would get into financial difficulty once interest rates started to rise.

“No-one should be lulled into a false sense of security that the current low interest rates we are experiencing will last forever,” said the CML’s director general Paul Smee.

“Rules are in place to ensure lenders assess future affordability, but these are not a substitute for careful borrowing.”

“It’s essential for borrowers themselves to have one eye on the future.”

UK Lowest Ever Average BTL Mortgage Interest Rates

The average cost of both fixed and variable buy-to-let (BTL) borrowing is falling confirms research from Remortgages.com. The lowest fixed rate BTL is currently at the lowest level ever recorded at just 2.45% . The number of deals in the BTL sector has also risen from 757 to 811 in just one month.

buy to let mortgages

These changes are part of a thriving market as lenders increasingly re-introduce competition across residential mortgage deals. This time last year there were 2,662 deals for borrowers looking for LTVs ranging from 100% to 75%, but now the number has increased to 2,943.

And as lenders loosen up after years of being risk adverse, the need to restrict borrowing to only those with high deposits or equity from previous homes has lessened with the number of restrictive 60%, 65%, and 70% and below deals declining from 1,021 to 845.

The battle to own the fixed rate market is set to continue and February has started with amazing rates, with the majority of deals at the lowest prices ever recorded.

“When you consider how dire savings rates are it is hardly surprising that BTL is proving popular with investors, and this is likely to increase once the rules relaxing the drawdown of pension pots in April come to fruition.

“Having had several years of the bank door being firmly shut to only the richest of borrowers, doors appear to not only be open but actively entice you in off the street with offers of fantastic rates.”

remortgages.com – The Mortgage Search Engine

remortgages.com is a leading UK’s independent provider of buy to let mortgage finance comparisons and mortgage deals. For the last 10 years, Remortgages.com information has been enabling mortgage decisions by homeowners looking for a great mortgage deal.

Financial Help If You Own Your Own Home

If you own your own home

Depending on your circumstances there may be other help available to you.

One way a lot of people find useful for raising some extra capital is to remortgage their home as this can help pay off those outstanding bills which may be the reason why your mortgage repaymanets may be under threat. Don’t wait until it becomes an issue – get a remortgage while your finances are not too bad then you will be able to secure a better rate rather than waiting till your need to remortgage with bad debt. Even if you don’t have debts to pay off you can still find some great remortgages that will help get your monthly bills down to a more affordable level.

financial help for homeowners

Avoid losing your home

Are you a homeowner struggling to make ends meet? There may be a number of ways to prevent eviction – benefits may be available to you.

Many homeowners miss out on extra weekly income because they do not know they can claim. The benefit system is complex and is difficult to understand and navigate succesfully. Don’t assume that you cannot claim extra help because you own your home.

For example, you may be able to get help towards:

  • housing costs, including interest payments on your mortgage or home loan, ground rent and some service charges
  • Council Tax
  • repairs and home improvements.

Help with housing costs

You may get help towards your mortgage interest payments and interest on loans taken out for repairs or improvements if you receive one of the following benefits:

How much help you get is worked out using a standard rate of interest. The standard rate used is the same as the Bank of England’s monthly average mortgage interest rate.

If your housing costs are not being met in full, you should inform your lender to discuss how to resolve the situation.

Your lender may be prepared to accept interest-only payments for a while. It is important to get advice at an early stage in order to avoid falling into arrears and risk losing your home.

More advice for homeowners

Remortgage Calculator – click here to find out more