Further Cuts to Mortgage Rates but Watch Out for Fees

Two or three lenders have introduced lower mortgage rates this week. It is improving, but not as good as it probably will be in another few weeks or months. The Mortgage Works has introduced a rate, which is as low as 4.49%, fixed for 2 years. However, it still has a high fee of 3%. As I’ve said before when I mentioned the State Bank of India fixed deal that was below 4%, and the other one from Skipton, they had a fee of 5%, which is absolutely horrendous. 3% is still very high.

However, Virgin Money has introduced a Mortgage this week, which is as low as 5.09% for 60% loan to value, and that only has a 1% fee. So that’s improving. You need to look carefully at the fees because this is how they are catching people out, not just your application fee but also your early resettlement fee. You need to ensure that that is not too high. If you have a fixed deal, there is always going to be a penalty for early resettlement, but life can sometimes offer surprises, and you need to know that if the worst should happen for whatever reason.

You have no choice but to sell, what is it going to cost you to get out? I did say that I believe that we would see rates as low as 4% by the end of the year. We’re getting there. The Virgin Money deal at 5.09% with a 1% fee is the best value overall so far. But I’m expecting that to be beaten within the next week to 10 days. So by the end of the year, I can see rates below 4.5% or as low as four with a 1% fee or less. So in the meantime, once again, it is a waiting game.

It does look like interest rates won’t go up at the next meeting of the Monetary Policy Committee. Hopefully, we have now reached the top. The lenders know that, and they desperately need to canvass for business because sales and subsequently mortgage approvals have collapsed, and the lenders have money that they need to lend so that they can keep growing their business. They are going to be fighting to lend you money over the next few months.

The cheapest deals probably won’t come until after the New Year in the current cycle. So it’s all a matter of how things stand for you personally, how long you can wait, and also, nobody has a crystal ball. Something could happen tomorrow, and suddenly inflation and then followed by interest rates could go through the roof. There’s no guarantees. Sadly, this is just the way things are. So for the time being, tread carefully.

Please check all the figures. I’m not a mortgage broker. I can’t offer advice. All I can do is provide you with some information. So do not base your decisions on what I have said. I’m hoping that by bringing these new releases to your attention, you will then go off and get professional advice from a broker, which is something you should all be doing, even if you are not ready for your mortgage or remortgage at this time. Hopefully, I’ll have some more good news for you in the next week or two.