There is presently a lot of conflicting information in the public domain when it comes to mortgage interest rates, all surrounding one key question: are they set to increase or decrease? Everyone seems to have a different answer. At Homeline Mortgages, we are all about providing straight-talking mortgage advice, because we know how important it is to be well-informed before applying for a mortgage or remortgage loan. That’s why we’d like to set the record straight on the current state of affairs in the highly competitive world of mortgage lending.
Where is the Bank’s base rate headed?
According to Bank of England’s governor Mark Carney, speaking at an annual meeting of the Trade Union Congress on 16 September, the Bank’s rates could increase as early as spring 2015. However, this by no means implies that interest rates on the whole are spiking right now or before early 2015. On 4 September, the Bank’s Monetary Policy Committee actually voted to maintain the current bank rate at a historic low of 0.5 per cent. Although the vote was split according to minutes of the meeting, supposedly due to concerns surrounding rapid increases in property prices across the UK, there is still no final decision as to whether the base rate will indeed be increased; so long as inflation remains below the Bank’s two per cent inflation target, there is no reason for borrowers to panic just yet.
How will you be affected?
So in light all of the ominous forecasts of rate spikes, what is the reality on the ground right now for mortgage loan applicants? The good news is that despite murmurings of an impending base rate increase, the market clearly doesn’t think the time is right to raise rates, with September marking the start of an all-out mortgage price war among leading lenders.
With falling swap rates (the interest rates lenders use to set loan prices), lenders are drastically cutting their rates, with the average rate for a five-year fixed rate mortgage with a 10 per cent deposit dropping by 0.6 per cent in the space of just a few weeks. In addition to falling swap rates, lenders may simply be eager to meet challenging end-of-year lending targets, or they may also have finally adjusted to the more stringent lending rules that came into force at the end of April.
Strike while the iron is hot
While rates aren’t expected to dip as low as they did in 2013 with the launch of the government’s Help to Buy mortgage support programme, now is undoubtedly the prime moment for property investors or home-hunters to take advantage of the exceptionally low rates, before the Bank’s base rate increase comes into effect next year.
Whether you’re a first-time buyer, a buy-to-let landlord or in need of a remortgage, at Homeline Mortgages, we have the experience and expertise to give you exactly the mortgage advice you need. For more information contact us today.