by Mark Johnston
The Centre for Economics and Business Research (CEBR) is predicting a slow down in the UK economic growth as a result of the recent budget announced by the new coalition Government’s George Osborne. The Centre for Economics and Business Research is an independent consultancy that has been at the forefront of business and public interest research. They provide analysis, forecasts and strategic advice to financial institutions and government departments. The report predicts that the cuts announced in the budget could have an impact of the speed of the recovery of the UK economy. CEBR forecast that this may result in the Bank of England base rate staying at the record low of 0.5% until the end of 2012. Many analysts have been predicting a rise by a percentage of two by the end of next year but this may now change.
The continued low base rate could prompt some lenders to reduce the average rates from 4% to around 3% by the start of next year. Moneyfacts announced early this month that mortgages rates were at a 7 year low and this report may trigger further cuts. The cost of a fixed rate mortgage has fallen since September last year.
There are currently a number of low mortgage rates available on the market subject to approval and a decent deposit.
HSBC is offering a discount mortgage at 1.99%. The mortgage is an HSBC variable rate mortgage with a two year discount. Because its a variable mortgage borrowers should note that the rate and subsequent repayments can go up and down as the rate rises and falls.
The mortgage is a 70% loan to value (LTV) which means you will need a 30% deposit because you can apply. The overall cost for comparison is 3.8% APR and has a £999 fee.
ING, the Dutch bank which spans 40 countries, including the UK is also offering a 2.55% discount mortgage. The variable rate mortgage with a discount of 1.45% current offers a 2.55% (3.5% APR) mortgage for 2 years after which it reverts back to the standard variable rate which is currently 3.5%. Loan to value is 70% and surprisingly there is no arrangement fee.
A £200,000 mortgage on the ING discount offer would mean you would have to find a £60,000 deposit, the residual £140,000 would set you back around £663 which isn’t to be sniffed at. Don’t forget that this does revert back to the higher variable rate of 3.5% which would bump up your payments to £700 a month with the current interest rates as they are.
First Direct, part of the HSBC group is also competing in the cut price mortgage market by offering a 2.29% tracker for those of you that have a spare 35% deposit under your mattress. The tracker is for the life of the mortgage and tracks at 1.79% above the Bank of England base rate giving it an APR of an attractive 2.3%.
Following the budget announcement, everyone seems to be tightening their belts but with deals like these on the market lets not hope its for too long. With uncertainty ahead the only thing you can count on it Mortgagerates.org.uk bringing you the best deals and straight talking mortgage news right to your browser.
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