How low will they go? The interest rate war

‘Mortgage rate war’ was one recent headline, and we are seeing a surge in banks cutting their mortgage rates by as much as 25% with HSBC said to have the lowest five-year fixed rate on the market, at 1.69%.

This will be welcome news for those looking to take out a mortgage, and a marked change from the rates seen 10 years ago.  The financial crisis in 2008 saw the start of the drop in mortgage rates, and they have been falling steadily ever since.

Rachel Springall, finance expert at Moneyfacts, said about HSBC: “It’s encouraging to see a bank with a large high street presence enter the price war, as borrowers may well want to guarantee their monthly mortgage payments over the next five years with a familiar brand that’s available to visit on foot.

Borrowers with a small, e.g. 10%, deposit, and who have limited funds upfront may find its new 2.34% deal attractive, as it carries no booking fee and offers a free valuation, which could be ideal.  As with any mortgage, it’s important to choose one based on the overall true cost, the lowest rate deal is not always the best.”

According to Andy Knee, Chief Executive of LMS, now is the time to re-mortgage, 19% of households who re-mortgaged in March managed to reduce their monthly repayments.  He suggests taking advantage of the low interest rates now in case economic conditions change later in the year.

There is no better time to move home and lock in a low mortgage rate for the next few years, and knowing exactly what your financial commitments are is a distinct advantage.

It is not just households that benefit from this drop in mortgage rates; the buy-to-let market has also fallen by around 3% since February.  Mark Lofthouse, Chief Executive of Mortgage Brain, said in the Financial Times: “Our latest analysis… shows that buy-to-let investors are still in a good position to take advantage of the low rates and cost reductions that we’ve seen over the past three months.”

Our team at Franklyn James are in the best position to give you the frank advice you need to help you find your next property, whether it is a future home or an investment.  To help you understand your own personal financial situation, we can recommend brokers that our clients have worked with and would highly recommend.

No one can predict the future, but by securing a mortgage at these low rates today, you can ensure that you will be able plan for the future without the worry of an interest rate rise.

Call Franklyn James today to start your property search in the Docklands.

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Useful guides

If you haven’t used an Estate Agent before, or just need to refresh your memory on what happens next, this is where we provide a brief guide to each process. Whether you plan to sell, buy, let or rent, these guides should make the task a little easier.

The Frank Vendors' Guide

Selling your property

Read the guide

The Frank Tenants' Guide

Renting a property

Read the guide

The Frank Landlords' Guide

Letting your property

Read the guide

The Frank Buyers' Guide

Buying a property

Read the guide