Mortgage lenders are in stiff competition with each other as they vie for customers searching for new deals, offering a measure of relief to those users facing higher bills. Mortgage brokers have observed that some lenders now have better remortgaging options compared with those suitable for buying a property. Borrowers whose cheap fixed-rate deals are about to end and are considering a new one can now find it easier to avail themselves of more favourable options. Two major lenders, Santander and Barclays, have declared more rate reductions, recently slashing rates on some of their products by up to 0.82 percentage points, effective from Wednesday.
A fixed mortgage rate deals retain its interest rate until the end of the term, usually two or five years, following which a new deal can replace it. However, staying idle would mean that customers pay a considerably more expensive fee than the average rate of more than 8%. There are around 1.6 million customers holding fixed-rate deals that will expire this year. While their new deals are almost certainly expected to be more costly, the rate cuts by leading lenders since the start of the year might ease some of the financial impact.
The financial information provider, Moneyfacts, said that the latest average rate for all new two-year fixed mortgage deals has undergone a significant slump since the onset of this year, now standing at 5.76%, one percentage less than last year’s highest rate. Moreover, five-year deals currently average 5.37%. However, such high mortgage rates could still lead to a downturn in house prices and increase arrears throughout this year, according to industry experts.
These market shifts in the mortgage landscape have taken place while Chancellor Jeremy Hunt dissociated himself from recent comments made by Sir Howard Davies, the chairman of the NatWest Bank. Davies had opined that getting onto the UK’s housing ladder “isn’t that difficult,” an assertion Hunt publicly contested during his interview with Martin Lewis on ITV on Tuesday. Hunt rebutted: “I don’t understand how he could have said that. I think people are finding it very difficult at the moment.”
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