by Mark Johnston
Another Mortgage War Begins!
It appears that mortgage lenders have been slashing their rates following the introduction of a multibillion pound scheme, the funding for lending scheme, which was launched in August last year.
The scheme was introduced in order to boost borrowing by giving lenders access to cheap finance and the number of mortgages on the market has now increased by nearly a fifth since the scheme started.
Recent lending data published by the bank of England revealed that lending from banks and building societies increased at the fastest rate since records began in 2007 in the final quarter of 2012.
Daniel Bailey a mortgage broker at Middleton Finance, suggested that “there are still good margins for the lenders and I see over the coming weeks more announcements from lenders that they are cutting their rates”.
Some headline mortgages currently being offered include a five year fixed rate at 2.79 per cent from the Co-operative bank, whilst those looking for a short term mortgage might be attracted by a two year fixed rate at 1.99 per cent.
Rachel Springhall, spokeswoman for comparison website moneyfacts.co.uk, warned that “deals that have recently appeared on the market have been withdrawn within weeks”.
Some lenders have launched special deals that are only available over a short period: for example Accord has a five year loan available at 3.09 per cent, but only until this Thursday.
Ray Boulger, senior technical manager at John Charcol, said of these particular deals “there is nothing like a deadline for focusing minds. Banks do this when they really want to encourage borrowers to sign the mortgage contract”.
Andrew Montlake, of mortgage brokers Coreco, believes that “there is every possibility that the coming months will see the cheapest mortgage products available for a generation, perhaps never to be repeated”.
Therefore the signs seem good if the plethora of rate cuts from major lenders in the first 10 days of 2013 are anything to go by.
Although, Howrd Archer, chief UK economist at IHS Global Insight, cautions that “while mortgage interest payments as a percentage of disposable income are very low, other affordability measures are not so favourable”.
Recent figures have shown how borrowers with big deposits are being routinely ripped off by lenders, which reel them in with rock bottom interest rates only to hammer them with hefty fees. hammer them with hefty fees.
Mortgage fees have soared by 48 per cent over the past two years even as interest rates have plummeted, according to financial data firm Moneyfacts.co.uk.
James Cotton, an adviser at broker London & Country, says “borrowers may pay a little less each month with what looks like the cheapest mortgage, but the total cost once the fee is factored in could mean they are thousands of pounds out of pocket.”
Clare Francis, at moneysupermarket.com, a comparison website, also adds that “fees also have to be assessed as well as headline rates”.
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