If you are in the market for a fixed-rate mortgage, you are in luck. Falling Swap rates – the rate lenders pay to borrow from each other – have plummeted following the Referendum and lenders have been cutting their fixed-rate mortgages accordingly.
This week, HSBC has launched a ten-year fixed-rate mortgage at just 2.79 per cent. Coventry Building Society then jumped in with a ten-year deal pegged at 2.39 per cent, although there is a maximum loan-to-value of 50 per cent. Meanwhile, Metro Bank released a five-year fix at 2.09 per cent with no product fee (up to 60 per cent LTV). Two-year fixes are cheaper still with rates starting from 1.34 per cent with a £999 fee.
While fixes are at rock-bottom, it is important not to fix for longer than you are absolutely sure about. Taking out a ten-year fix when you are buying your first flat with a friend, for example, might not be sensible as your circumstances could change significantly over the decade and you may face a hefty early repayment charge (ERC) to get out of the deal early. But if you are married with a couple of young children, a ten-year commitment during which you have the security of knowing your mortgage payments won’t rise, may be welcome.
With all this attention on fixed rates, it’s easy to forget base-rate trackers but if you don’t need the certainty of a fix, they are worth a look. With Bank of England Governor Mark Carney suggesting that the next move in interest rates may be downwards, a base-rate tracker will not only be cheap now but could get even cheaper. Base-rate trackers start from 1.34 per cent over two years, with a £999 fee and no ERCs, so you can switch to a fixed rate at any time.
There are plenty of good deals on offer – talk to an independent professional adviser such as Anderson Harris, for more details.