Banks and building societies are lowering their mortgage rates which should help the current situation on the property market.
New Rates
The banks and building societies are about to enter into a lending war as many are slashing rates so they are more competitive. HSBC has the lowest rate of all the banks and also the lowest ever five year fixed rate at just 2.99 per cent. Santander have matched this rate, however, it is only available to their existing customers that hold current accounts. Royal Bank of Scotland has also launched a new lower rate product. They have a five year fixed rate mortgage at 4.79 per cent for those who have a 10 per cent deposit.
The chief executive at SPF Private Clients, a mortgage broker, Mark Harris, has said, “If other lenders follow suit, it should have a positive impact on the housing market, with cheaper deals.”
Why the New Rates?
There are two reasons why mortgage rates are being lowered, the first is to do with the price that the banks are lending money to each other and the other is that the Government has funding for a lending scheme.
Mr Harris added, “Although the funding for lending scheme has only recently launched, we expect to see mortgage rates start to fall in coming weeks.
“Increased levels of lending would boost the market, so with 100 lenders invited to participate, there should be better rates and more choice of deals. The early signs are encouraging.”
Are they Still Unaffordable?
Russell Quirk from eMoov.co.uk, which is an online estate agency, has said, “The problem is that HSBC and Santander’s headline grabbing five year fixed rate deals are really only available to a select band of borrowers, with very large deposits. Also the best rates right now also come with some pretty hefty fees attached.”
Those looking to have HSBC’s five year fixed rate mortgage will need a 40 per cent deposit in order to qualify and will need a further £1,499 for the booking fee. On top of this there are other fees to consider such as removal vehicles and landlord insurance.
David Hollingworth from London and Country Mortgages has said, “It was a real landmark moment when HSBC launched that mortgage and others have been catching up. We won’t see everyone pushing to compete but there will be more changes in rates to come – for the better.”