As 2016 comes to a close, it is natural for thoughts to turn to next year and what might happen with the housing market. As far as mortgage rates are concerned, it is hard to see much at all happening. With interest rates unlikely to rise anytime soon, I wouldn’t be surprised if they stayed pretty much where they are, give or take the odd fluctuation along the way.
Swap rates, the rate lenders pay to borrow from each other, have risen in the past couple of months but despite this mortgage rates have remained fairly consistent, with some lenders even reducing their five-year fixed rates in particular. This suggests that some lenders are prepared to suffer reduced margins in an effort to attract business. It is likely that this will continue into next year as lenders compete for borrowers so even if Swap rates do fluctuate on the back of bad economic news, lenders will be prepared to make less profit.
With mortgage rates already so low, we don’t expect them to become much cheaper but lenders are likely to continue to offer incentives and other freebies such as no arrangement fee or cash back in order to attract borrowers rather than compete on rate. As always with your mortgage it is vital that you seek independent advice from a mortgage broker to ensure you don’t pay more than absolutely necessary as it is likely to be your biggest outgoing.