by Mark Johnston
With the Bank of England base rate still at a record low of 0.5%, many borrowers are choosing to remain on their lenders Standard Variable Rate (SVR) or up a tracker mortgage as both seem to provide good value for money. The Bank of England have kept the 0.5% rate for the past 18months and many insiders think that the rate will stay at record lows for at least the next year.
Others in the industry are monitoring the economy and are concerned that a revised projected growth forecast for 2010 by the Office for Budget Responsibility may increase the possibility of an increase in the base rate a lot sooner than many are predicting.
Any potential change in the base rate in the future may have a negative affect on fixed rate mortgages today as banks and building societies don’t want to be in a position where the base rate is above their fixed rate deals. If lenders believe that the base rate will go up, then their fixed rate products will also increase.
Some industry watchers still think that fixed rates are way too high when we have such low interest rates. A few experts have even gone as far as to accuse lenders of profiteering. That’s said, there has almost been a quiet rates war going on with many of the big lenders dropping the rates on their mortgage range to compete on price.
Lenders have been warning for some time that the cost of wholesale borrowing together with the withdrawal of government help for struggling home owners may force mortgage rates up. So it might well be time to start looking at fixing before rates go up. There are a wide range of fantastic deals on the market at the moment, www.mortgagerates.org.uk have taken a look at some of the best out there at the moment.
HSBC is still topping the best buy tables with some excellent deals. One of their best is a two year fixed rate mortgage at 4.99% with a first time buyer friend loan to value (LTV) of 90% meaning that borrowers would need to find a 10% deposit and a very reasonable £99 fee. Those with a larger deposit of 35% should look to HSBC’s sister company First Direct who are offering a two year deal for just 2.89% with a £495 fee.
For longer term fixed rate mortgages, the Post Office is offering an excellent deal for a 5 year fixed rate mortgage at 5.79% and a £995 fee. The great news is that first time buyers could be interested in this mortgage as the deposit is only 10%. Obviously the rate goes down the larger deposit borrowers have so those with a 25% deposit and can reduce their rate down to 3.89% whilst borrowers with even larger deposits should look to the Yorkshire Building Society. The Yorkshire is offering a 5 year mortgage with a loan to value (LTV) 75% for 3.69% although their fees are higher at £1495.
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