Mortgage news
Latest Base rate cut to 1% - Why now could be the right time to move your mortgage
Dale Mortgage Brokers comments on the latest decision to cut the Bank of England Base Rate to its lowest rate in history of 1% and why staying on a standard variable rate may not be the best option.
"Given that the base rate, and therefore in most cases Lenders' Standard Variable Rates (SVR), have fallen to unprecedented levels in recent months, it might be tempting to stay on a standard variable rate, and moving away from that rate may not seem like the most logical option. However, there are some good reasons why moving your mortgage now would benefit you in the long run, even though you may have to pay an early repayment charge to your existing lender if you re-mortgage.
If the current trend of falling house prices continues, home owners will find that their Loan To Value (LTV) will increase - the loan amount as a proportion of the property value. As most lenders have mortgage interest rates that are tiered dependent upon the LTV e.g. typically 60%, 75% and 85% LTV, the longer borrowers leave it before fixing their mortgage they could find themselves having access to fewer mortgage products when they do decide to re-mortgage.
As we are likely to be getting towards the floor in the interest rate market borrowers will have to consider how much further they believe interest rates will fall and potentially whether to provide themselves with some security by locking into a fixed rate. Even if the BBR falls further - perhaps below the 1% level the price of fixed rate mortgage products is unlikely to see further similar reductions.
Borrowers therefore considering moving home or those re-mortgaging should now seriously consider investigating the opportunities that the current very favourable pricing conditions offer. Although we are likely to be in a low interest rate environment for some time yet it is likely that interest rates will rise in future - and possibly as sharply as they have recently fallen - as and when the economy starts its recovery.
Mortgage rates currently are at an historic low. Fixing your mortgage now will ensure that your payments can be kept low into the foreseeable future. This is a benefit in itself but also enables you to budget for the long term, and through what are likely to be turbulent times. Borrowers whether on their lenders SVR or tied into an existing fixed rate should consider impartial independent mortgage advice to see if re-mortgaging now can really be of benefit to them, or just to discuss their options, for now or in the future."
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