Mortgages below 1% - what?!
According to Chris Pilling - the head honcho over at Yorkshire Bank - mortgage rates could drop to below 1%. It looks like there's going to be a mortgage price war on, which is good news if you're one of those people who can actually get a mortgage.
He reckons that two-year fixed-rate mortgages could drop to such a level, which would take around £130 off the annual bill for a house with a £150,000 loan. Last year, the Post Office offered a record low, with their two-year fixed mortgage rate at 1.05%.
"If we go as low as that again, you can’t say no to anything... and competition [between mortgage lenders] has been significantly stronger in recent months." said Pilling.
The Bank of England kicked everything off, by getting rid of their plans to raise interest rates. Mark Carney, BoE governor, said that the base rate could be cut, ending up below 0.5%, adding that Britain could follow other countries and cut rates ‘towards zero’. If this happens, lenders are making plans to cut their rates too.
Currently, the cheapest two-year fixed mortgage rate is with Yorkshire Building Society, who last week, cut its two-year fixed mortgage rate to 1.14%. First Direct are hot on their heels with a rate of 1.15%.
Five-year fixed-rate mortgages are also edging downward, with HSBC launching a 1.99% in January.
Of course, it isn't just the rates that concern you - if there's fees and extra charges that are going to hammer you, pushing up the cost of your mortgage, this is all a moot point. So, Yorkshire Building Society has a two-year fixed rate at 1.14& with a £1,475 fee, while HSBC has a five-year fixed rate at 1.99% with a £1,999 fee.
There's a 10-year fixed deal with TSB at 3.04% with a £995 fee too, and the Post Office have a five-year fixed rate of 2.43% with a £1,495 fee.
You're going to have to shop around to see what works best for you, and indeed, what will be made available to you - it is a good time to look into it. Your savings might not have the best rates at the minute, but there's a price war due.