Mortgage lenders have dropped rates over the past couple of weeks to new lows; the major banks are now offering two year fixed rate deals starting at 2.99%. Bank representatives have said rates are unlikely to drop any further as they will have to think about the rates they can offer their savings customers. So is now the time to move to a fixed rate deal? Brokers are advising that it depends on your circumstances.
If you are a first time buyer and are looking for a in the minority of people who have a mortgage worth £600,000 or more then it is advised you should remortgage if you can get one of the leading rates around five percent for a two year deal.
Those in the majority who have a mortgage for less than this are advised they should stick with their standard variable rate for the moment. This is because on a two year fixed rate deal with the best deal at around four percent it would cost more than if you stick with the standard variable rate.
However if you are looking to remortgage the opposite advice is true.
You should check if your mortgage lender has cut their standard variable rates as most haven’t by much making them the more expensive option unless you have a small borrowing of less than £50,000.
If you have done your calculations and believe a fixed rate deal is best, before you go ahead think about the market is likely to be like when your fixed rate deal comes to and end. Two year deals can leave you coming out as the economy starts to recover and you are forced to take a much higher rate. The last trough was in 2003, it is predicted 2014 may be next time for rates to be low. Five year fixed rate deals are on offering at fair rates of around four and a half percent however one leading lender is asking for a forty percent deposit. If you are able to put this deposit it is a good deal worth considering. Of course five years time it is hard to predict the market conditions.
Taking out a mortgage or swapping mortgage lenders is a major decision. A mortgage broker could be the answer, they can offer you expert advice and many will search the whole of the market to ensure they check all the deals open to you.
