Money saving expert Martin Lewis has urged homeowners to switch mortgages now as economic uncertainty and forecast long-term low-interest rates offer a silver lining for mortgage holders.
Halifax is the first lender to break the 1% barrier this year with a new tracker mortgage at an initial rate of just 0.98%. It’s available to borrowers who have a 40% deposit and are willing to pay the £999 up-front fee to secure this year’s first sub-1% mortgage.
Variable mortgages are often tied to the Bank of England base rate, meaning if the rate changes borrowers’ mortgages increase or decrease accordingly. But those willing to take the risk of a variable deal could save £700 a year on their mortgage, and another £600 if rates fall next year, according to Moneyfacts.co.uk.
With the Bank of England showing little sign of a rate increase and the average variable loan rate at 2.01% and the equivalent fixed at 2.4%, the potential savings could encourage more opportunistic borrowers to choose a variable deal.
Speaking on ITV’s Good Morning Britain, Martin Lewis, founder of moneysavingexpert.com, said: “My clarion call to everybody out there is that you need to check your mortgage now to see if you could get a cheaper deal and possibly save thousands.”
Low rates available across all mortgage terms
While some borrowers are willing to take a gamble, the more risk-averse can take advantage of low rates on ten-year fixed mortgages. Moneyfacts.co.uk reports that the intense competition between lenders has pushed the average 10-year fixed rate down to an average 2.76% and the lowest currently available is 2.2% from Coventry Building Society.
With good deals available across shorter-term fixed rates too, borrowers are spoilt for choice. Halifax is offering a two-year fixed-rate at 1.08% with a product fee of £995, borrowers can secure a three-year fixed from HSBC at 1.44% with a £999 fee and Skipton has the best five-year fixed available at 1.44% secured with a £995 fee.
As mortgage rates continue on a downward trend, and the industry expects further price drops during December as lenders look to get business over the line before the end of 2019, borrowers can make significant savings.