by Mark Johnston
Fixed Rates Fall Below 1.5%.
Due to current improvements in survey data, official data and the housing market, the bank of England’s governor Mark Carney has stated that interest rates will remain at their record low of 0.5 per cent for at least three more years.
This particular news will no doubt be god news for most home owners but it will mean more lean times for savers.
Vicky Redwood, chief UK economist at Capital Economics, also raised the possibility that the Bank could cut rates to 0.25 per cent.
In light of the low base rate many types of mortgages, such as fixed rate loans, have never been cheaper
These cheap rates have benefited around eight million home owners with variable or tracker rate mortgages, whose repayments have fallen sharply.
Mortgage experts have recently forecast that mortgage rates could be about to set new lows.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said “rates are falling all the time with no upward pressure on underlying swap rates.
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.
Therefore it appears that the mortgage price war among lenders has intensified recently as a bank launched a deal with a record sub-1.5 per cent rate.
It seems then that the HSBC has become the latest lender to flex its muscle in the mortgage market as lenders continue to slash rates to attract borrowers – offering a two-year fixed rate at a new record low of just 1.49 per cent.
Potential borrowers will however need a 40 per cent deposit and they also face a hefty £1,999 fee.
The product then moves to the HSBC’s standard variable rate, which is currently 3.94 per cent, at the end of the term.
This rate will shoot HSBC to the top of the best buy tables and the financial information website Moneyfacts has suggested that this rate is the lowest for this type of deal.
The fall is down from 0.2 per cent from the previous best buys of around 1.7 per cent. A fall of a fifth of a percentage point may seem low, but it equates to a £50 decrease in monthly repayments or £600 a year on an interest only basis. On a repayment loan the reduction would be £30 a month, assuming £300,000 was borrowed, according to Anderson Harris, the mortgage broker.
Peter Dockar, head of mortgages at HSBC, said: “We have seen increasing confidence in the market and with mortgage rates at an all time low now is a good time for borrowers to review their existing rates.”
The average rate offered across the market on a two-year fixed deal for someone with a 40 per cent deposit or equity has plummeted from 4.47 per cent one year ago to 3.32 per cent, according to financial data.
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