Did you know that a two-year fixed rate mortgage is now available at 1.18% (4.99% subsequent rate, APR 4.4%, maximum LTV 65%, arrangement fee £1,499) and a five-year fixed rate mortgage at 2.19% (5.45% subsequent rate, APR 4.3%, maximum LTV 60%, arrangement fee £1,675)?

The Bank of England has reported that fixed rates are at record lows. In fact several banks are now charging less for their mortgages than they are paying on their best ‘easy access’ saving rates. The next few months could prove the best time in history to take out a fixed rate mortgage.

2 year swap rates (which reflect the costs to lenders of funding fixed rate mortgage) are historically fairly low, but 52 basis points higher than their lowest point in February 2013 – and rising (see chart).

As we have pointed out in earlier blogs, it is competition between lenders that is driving mortgage rates down at this point in the cycle, not the underling funding costs. The arrival of new entrant banks in the UK mortgage market has also increased competition, driving down rates further. The next few months could prove the best time in history to take out a fixed rate mortgage as experts do not foresee rates falling any further, later on this year.

But while many banks are offering extremely competitive fixed rates, potential borrowers must still pass strict affordability tests which were introduced by the Financial Conduct Authority via its Mortgage Market Review last April and a further recommendation by the Bank of England last June that no more than 15% of new lending was for loans worth more than 4.5 x income.

Both of these restrictions caused the mortgage market to slow down slightly in the second half of last year as lenders adapted to the new lending environment, but they are now making up for lost time and competing aggressively for customers once again.

Private Finance

  • Established in 1999 Private Finance has successfully negotiated billions of pounds of mortgages. It is an independent mortgage broker whose mission is to exceed your expectations, working on your behalf to procure competitive terms and a suitable solution, quickly and efficiently.
  • Private Finance is not limited in the range of mortgages it will consider for clients. It is well respected by mainstream institutions and private banks, with which it has a reputation for introducing high quality clients. Its mortgage brokers are qualified professionals who understand and empathise with the needs of discerning individuals.
  • You can be assured that your mortgage will be competitively priced and well suited to your needs.
  • As a client of Private Finance your mortgage arrangements will be handled on a day to day basis by your dedicated broker. You will not have to deal with call centres or spend time providing personal information via online forms.
  • You are therefore free to get on with your life in the knowledge that your mortgage application is being managed proactively in order to meet important deadlines.
  • Our brokers take pride in helping clients fulfil their property aspirations and can often turn the seemingly impossible into reality! You may be able to look at a wider range of property than you previously expected and overcome obstacles which might have stood in the way of progress.

Email info@privatefinance.co.uk or call 0800 980 8777.

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