by Mark Johnston
Could now be the time for borrowers to fix their mortgages?
It seems that interest payments on fixed rate mortgages are tumbling to record lows.
Brian Murphy, head of lending for the Mortgage Advice Bureau, states that “falling rates for the fourth successive month have prompted almost nine out of ten mortgage applicants to opt for fixed deals”.
Best buys on fixed rate mortgages could fall as low as 1.5 per cent, experts have recntly predicted.
David Hollingworth, spokesman for broker London & Country Mortgages, said that he expected to see lenders “continue to tweak their rates in an effort to maintain a competitive market position, which should see more cheap fixed rates being launched”.
The best five year fix for a borrower with a 10 per cent deposit is with Loughborough Buiding Society at 4.24 per cent, which comes with a £599 fee. The society also has a three year fix, also for borrowers with a 10 per cent deposit, at 4.09 per cent with a £499 fee.
A new five year fix from the Co-operative offers borrowers the chance to lock in until 2018 at just 2.79 per cent. The deal from the Co-op Bank has set a new benchmark for increasingly popular five year fixed rate mortgages, but borrowers will need a 40 per cent deposit and have to pay a fee of £999.
Skipton Building Society has also cut rates on a selection of its residential 2, 3 and 5 year fixed rate products.
Kris Brewster, Skipton building society’s head of products, said: “We’re constantly monitoring the marketplace and adjusting our products and interest rates to ensure they remain among the most attractive available. These newly reduced rates signal our intent to continue where we left off in 2012, lending strongly to enable more people to buy their desired homes wherever possible”.
Theses drop are the latest in a fresh round of mortgage rate cuts.
Another cut came from Leeds Building Society, which is offering those with a 25 per cent deposit a two year fix at 2.54 per cent with a £999 fee. This is the lowest rate on the market but it comes with a catch, homeowners must take Leeds’ buildings insurance otherwise the rate rises to 2.78 per cent
However the latest round of cuts they are only really targeting the best borrowers, therefore until proper competition returns to the mortgage market lenders will hold all the cards and rates will be twitchy.
Lenders certainly have room to push rates down further with more money to lend, but there is no guarantee that they will do so though and many are likely to use chunky margins to rebuild balance sheets.
Certainly, those on standard variable rates of 4 per cent or higher with reasonable equity in their home should seriously consider moving.
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