Just when we thought mortgage rates could not get any cheaper, lenders prove us wrong. The five-year fix from Atom Bank pegged at just 1.29 per cent and 0.89 per cent two-year discount from Yorkshire Building Society – the lowest ever mortgage rate – prove that lenders are determined to lend and prepared to reduce their margins to do so.
While these cheap deals tend not to last long – the Atom Bank rates were pulled less than a week after launch as the challenger bank was inundated with applications – the good news is that the general trend for mortgage rates seems to be downwards. Just this week, Santander and Accord have reduced their mortgage rates; Nationwide offered its lowest ever 90 per cent loan-to-value mortgages; Leeds launched a record low five-year buy-to-let rate; and Kensington cut over 70 per cent of its residential rates. With a range of lenders keen to compete – not just the biggest banks – the outlook for borrowers is encouraging.
It is possible that we will see more headline-grabbing rates such as those offered by Atom Bank as a lender tries to get some attention and drum up some business. But borrowers cannot take this for granted. Even if it were to happen, these deals soon disappear so anyone hoping to get in on the action would have to act extremely quickly. And with tougher affordability criteria since the Mortgage Market Review was introduced in 2014, there is no guarantee that borrowers will be able to qualify for a deal anyway, which is where good advice is crucial.
We are close to the bottom of how low mortgage rates can feasibly go so there is not much point in borrowers trying to ‘time’ it so that they get the very cheapest deal, particularly if they are sat on an expensive standard variable rate in the meantime. There is so much potential uncertainty with the Brexit negotiations that it is hard to predict what will happen over the next few months.
The total cost of any deal is also important – those with the cheapest rates also can also have the heftiest of fees and a broker will keep an eye on the overall cost when deciding which is the most suitable mortgage for your circumstances. Please get in touch for further information.