by Mark Johnston
With many mortgages taking months to complete, more and more lenders are looking to get mortgage business on the books in order to fulfill their end of year loan targets.
Rates have also hit record lows in a mortgage price war as banks and building societies desperately try to kick start the UK’s housing market.
These mortgage rate cuts appear to have accelerated to a daily event as lenders take turns to top the best buy tables.
Rates on both 5 year and 10 year fixes have dipped to the lowest levels that have ever been seen.
So just when borrowers thought that the ‘good times’ in the mortgage market were coming to an end, Chelsea building society has launched a 5 year fixed rate mortgage at 3.19%, which is the lowest since records began.
To obtain this deal borrowers need a 70% loan to value (LTV) and will need to pay a fee of £1,495, meaning that monthly repayments on a typical £150,000 mortgage would be £726. This offer massively undercuts competitors in the 5 year market.
Northern rock has announced that it has cut 0.9% off their fixed rate mortgages.
Also, following Nationwide building society unveiling a basic mortgage rate of 6.49% for both new and existing customers, which is approximately 1% lower than the standard variable rate (SVR) of the main mortgage banks, the Halifax has announced it is to reduce its rate from 7.55 to 6.75%.
James Crosby, chief executive of the Halifax, said “the battle is now on for the hearts and minds of the consumer. It is a battle the Halifax is determined to win”.
Some financial experts believe that this increased competition may also lead to further falls in fees and rates for longer term fixed mortgages, meaning those who want to budget and prepare for an increase in rates will be able to do so.
Norwich and Peterborough building society, which is part of the Yorkshire building society, has launched a record breaking 10 year fixed deal at 3.99%, with a £295 fee.
Although fro those borrowers willing to take a gamble on interest rates, the HSBC offers a lifetime tracker which is 1.99% above the base rate, giving a current rate of 2.49%.
All these deals signify a fresh and fierce battle with in the mortgage market place.
David Hollingworth of London and Country mortgages suggests that “lenders can not afford to leave any push too late and consequently they have to fight on price now much more than we have been use to”.
Melanie Bien, of the mortgage brokers Private Finance, believes rate could fall further and states “compared historically the current rates are fabulous, but they could go further, particularly longer term deals such as over 5 years”.
However the battleground is still unattainable for many first time buyers as the best deals to be found require deposits of at least 40%.
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