Posts Tagged ‘mortgage interest rates’

Mortgage interest rates set to rise in 2010

January 7th, 2010

Market analysts are now predicting that even if the Bank of England base rate is not increased in 2010 many lenders are likely to increase their rates. Some analysts such as Stephen Noakes, Lloyds Banking Group, are looking at the market consensus on bank base rates, the view was “Bank of England will first raise interest rates in the middle of the year and that base rates will end up at 1.5% by the end of 2010”

So either way it would seem that all those with variable or tracker mortgages will see increases before the end of 2010.

One of the issues for lenders is that they are currently making losses by lending on low rates when their true cost of borrowing is much higher.  This is a situation that cannot last.

For those with buy to let tracker mortgages at rates of 3% to 4% over BBR this could see them paying as much as 6% by the end of 2010 with further increases in 2011.

It looks like 2010 is going to be an interesting year for the property market!

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Posted in Buy-to-Let, Mortgages

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Barclays – Woolwich – mortgage rates cut

October 22nd, 2009

Some good news for property buyers with new announcements made about cutting mortgage interest rates.  It would seem that market competition is starting to increase which should be welcome news for most borrowers.

Specifically the Woolwich (part of Barclays) has announced cuts of 0.6% on its 3 year and 5 year fixed rate products. If you can afford a 30% deposit then Woolwich have announced a 2 year fixed product at 3.79%.

Other banks are also cutting rates on their products, these include the Nationwide and Cheltenham & Gloucester (part of Lloyds TSB).  Even the state-owned Nothern Rock has got in on the move to cut rates, for those with 20% deposit they are offering a 2 year fixed rate of 5.69%.

In almost all cases lenders do charge fees, typically in the range £500 to £1,000. 

We do not offer any advice on mortgage products in this blog, but with rates starting to improve it could be a good time for some to discuss their options with an FSA approved mortgage broker.

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Mortgage tracker deals ending

October 13th, 2009

Two years ago many lenders were offering some incredible tracker deals with rates tracking the bank base rate very closely, and in some cases at a discount to the bank base rate.  The result has been many of those with base rate trackers from 2007 have been paying very low (in some cases zero) mortgage interest.  But all good things come to an end.

The question for many people as they exit these two year tracker deals is this; do they stay with their existing lender and their SVR, or look for a mortgage elsewhere?

There are many factors to consider here, one being whether you need the security of a fixed rate mortgage knowing what your monthly outgoings will be, or whether you want to go with a variable rate product.  Before making a decision it is best to read up on what the market thinks will happen with mortgage rates, and also take the advice of a good mortgage broker / financial advisor.

At this time the SVR for many lenders is below 4%, in some cases less than 3%.  If your view is that interest rates will remain low for years to come then maybe the SVR product is best for you.  If you think the interest rates will rise and soon be back to the 5% plus levels then maybe a fixed rate at sub 5% is good for you – it is a choice based on your circumstances. 

We do not offer mortgage advice on this blog but you will find much information relating the UK economy and views on where interest rates are heading. At the end of the day it is a personal choice as to which mortgage product you choose, but for me I like tracker mortgages, my own view is that it will be some time before base rates rise significantly, so for now I am keeping away from fixed rate products.

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Mortgage rates falling – HSBC and others

September 3rd, 2009

Great news for property buyers, mortgage rates are falling. 

Just as we were all starting to criticise the banks for their taking excessive profits by increasing their margins on mortgage interest rates we now see a surprise move by HSBC who announced a 1.99% mortgage offer.

But you have to read the detail that goes with this…..

  • There is an arrangement fee of £1,199
  • You need a massive 40% deposit. 
  • The rate tracks HSBC variable rate with a discount of 1.95%, so as rates go up in the next year or two then so will the 1.99% mortgage rate.
  • The discount of 1.95% is offered for 2 years, after that the rate reverts to HSBC’s variable rate (currently 3.94%). 

Overall though this is still a great deal from HSBC, and one that will certainly shake up the market. Already a number of other lenders have improved their mortgage offers, these include:

Woolwich (part of Barclays) trimmed their 2 year fixed product by 0.2% to 4.09%.  You need 30% deposit and there is a £999 arrangement fee.

Cheltenham & Gloucester trimmed their 2 and 3 year fixed products by 0.2% to 4.19%.  You need a 40% deposit.

Apart from the HSBC offer the reductions are still quite small compared with the falls in the cost of wholesale money (e.g. 2 year swap rates and LIBOR), but it is a move in the right direction.

Please note – we are not mortgage advisors, we simply publish what we find for your information, please speak to a regulated mortgage broker for advice.

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Mortgage interest rate forecast

August 18th, 2009

In the last 6 to 12 months most people with mortgages have benefited from low interest rates, but this can not go on forever, there will come a time when rates increase again.  We have been reviewing comments from financial analysts and economists to understand what is likely to happen to mortgage interest rates in the next 2 years.

Firstly it is worth looking at those fortunate people who have been paying 0% (not sure if paying is the right word here) on their mortgage.  Typically those with Birmingham Midshires, HBOS and Co-op.  In most cases these were discount tracker mortgages where they tracked the bank base rate minus 0.5% or more – but with a minimum of 0% payable, otherwise the banks would be paying some people to have the mortgage!  These tracker rates will soon come to an end, most during 2009, after this the rates will revert to either the lender’s standard variable rate (SVR) or at a bank base rate plus a percentage.  Typically borrowers can expect their rates to recover to around a current level of 4% to 5%.

Key for almost all borrowers will be what happens to the bank base rate, currently at 0.5%.  We have been searching for analyst views on this and overall it seems to be good news for borrowers.  The mid point of views we found was from Deutsche Bank (George Buckley) who are forecasting that base rates will stay at 0.5% until mid 2010 after which they will increase to 0.75%.

More pessimistic economists are predicting that base rates will start to rise from late 2009, hitting 1.25% by mid 2010 and 4% by the end of 2011. The most optimistic are saying that base rates will remain at 0.5% until the end of 2010 before they start to increase in 2011.

Overall it seems that low interest rates will be around for another year but we all need to be prepared for future increases.  This could become a major issue for some, after paying abnormally low interest on their mortgage for a long period of time it may become difficult to adjust to paying “normal” mortgage interest rates of 5% or more.

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