Grab a cheap mortgage while you can! Lenders warn home loan rates may be about to rise
At present borrowers can get a two-year fixed rate mortgage for just 0.99 per cent, or those looking for longer-term deals can lock into a five-year fix at 1.64 per cent
HOMEOWNERS should considering nabbing a record low mortgage rate while they can, with lenders warning rates may not go lower.
Households are currently benefiting from the cheapest home loans on record but the Council of Mortgage lenders has suggested that the era of low rates may be coming to an end.
At present borrowers can get a two-year fixed rate mortgage for just 0.99 per cent, or those looking for longer-term deals can lock into a five-year fix at 1.64 per cent.
'Mortgage rates are still close to historic lows, but we see little scope for further improvement with recent data showing a slight increase in mortgage rates on offer', the CML said yesterday.
The warning that mortgages may not get any cheaper follows hints from the Bank of England that an interest rate rise may be closer than previously expected.
In the Monetary Policy Committee meeting last week three members of the board voted for a rise, rather than the expected one vote.
Interest rates were held at 0.25 per cent, with five to three votes but the Bank's chief economist Andy Haldane said on Wednesday that he could change his vote in the coming months.
Mortgage rates hit low levels after the base rate was cut to 0.25 per cent in August last year.
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Experts say households with expensive standard variable rate deals should switch now.
Commenting on market conditions, CML director general Paul Smee said: "Remortgage activity and first-time buyers continue to drive lending this year.
"Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions."
Here's how you could switch to a cheaper home loan
- Check that your existing mortgage doesn't have any exit fees if you choose to leave - check your paperwork, as some fees can be hundreds of pounds
- There are also sometimes fees when you open a new product with a new lender, so make sure you can afford these charges before switching
- Compare mortgage products by using comparison websites such as MoneySuperMarket and uSwitch.com to find the cheapest deals
- Work out how much your mortgage repayments are going to be on the new deal by using a mortgage calculator.
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