With an improving economy, expectations are that interest rates will rise sooner than the Bank of England originally suggested, the scaling back of Funding for Lending has also bumped up mortgage costs. Mortgage lenders still have some astonishingly low rates on offer and their increased confidence in the market makes this one of the best times to be looking for a new mortgage since the credit crunch hit.
So is it time to opt for a fixed rate mortgage – and how are things looking for those with smaller deposits?
Two year fixes remain nearer their record lows but borrowers can be faced with hefty fees if they don’t know the full range of options available to them. The cream of the crop of five-year fixed rates were being offered last year at just below 2.5% – now the best deals on offer sit nearer 3%. The margin between five year and two year fixes has reduced but a shorter fix still remains cheaper. However, at the end of a two year fix you will move onto a lender's more expensive standard variable rate, which could rise any time, and many certainly will when rates go up, however at this time you have the option to consider moving to a non fixed firm. Be warned you may end up coming off a two year fixed rate just as rates are rising, the Bank of England believes this will be 2015 but recent movements in the market suggest this will be sooner.
Things are continuing to look up for borrowers with smaller deposits too. The bigger margins on these mean lenders are attracted to lending at higher loan to value ratios and in the light of increased competition this is a trend which looks like it will continue, good news for first time buyers wanting to get their foot on the property ladder.
So is it time to review your mortgage now? Borrowers may find it a better move to act now if they want a mortgage rather than delay.
At David Allen Financial Services our Independent Mortgage Advisers will meet you at a time and place to convenient to you. With us the client wins every time and you avoid the hassle of shopping around as we do the hard work for you. You can trust in us to look after all your financial needs, including finding you the very best mortgage deal. Call us on 01228 711881 to arrange your free mortgage review.
Your home may be repossessed if you do not keep up repayments on your mortgage.