We are in the grip of a mortgage price war, according to some experts – but it probably won’t feel like that if you are staring down the barrel of much higher monthly payments.
It is certainly fair to say that rates on new mortgages have been on a rollercoaster ride in recent months. Last September’s disastrous mini-budget helped push the price of many new fixed home loan deals above 6%.
Since then, lenders have been gradually reducing the cost of their new fixed rates, and the cheapest new five-year deals (from, for instance, HSBC, First Direct, Virgin Money and Yorkshire building society) are now priced at below 4%. The availability of deals has also improved.
However, if you are coming to the end of a fixed-rate deal and need to take out a new one, you are still probably looking at forking out a lot more each month.
At the same time, the Bank of England base rate has been climbing, with yet another interest rate rise looking likely, and there’s much debate about what will happen to the housing market.
So what are your options?
Some experts suggest that with the price of new fixed rates falling almost daily, those people hoping to remortgage now may want to go for a base rate tracker mortgage with no early redemption penalties for the next few months, and then hop over to a fixed-rate deal. That way, they won’t miss out if and when fixed rates fall further.
Others disagree. Ray Boulger at the mortgage broker John Charcol says that in general, if you are not planning to move home in the next year or two and you are looking for a fixed rate, “I’d be inclined to look at what’s available now rather than going on to a tracker [for a short time]”. Now you can get a five-year fix for under 4%, for most people it is “probably right
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