Average mortgage rates are falling by the week, new data from Uswitch shows.
Kellie Steed, Uswitch mortgage expert, commented: “News of mortgage rate cuts continues this week, with Barclays announcing reductions of up to 0.5 percent on some of its fixed-rate products.
“This comes more than a week in advance of the first Bank of England Base Rate announcement.
“It’s impossible to predict exactly what their decision will be, but whether they choose to increase, decrease or maintain the current Base Rate is likely to have a bearing on mortgage rate fluctuations into February and March.”
Mortgage rates differ depending on the deal offered. Here’s a rundown of average rates available now.
Average mortgage rates this week
According to Ms Steed, the average two-year fixed-rate mortgage (75 percent Loan To Value) has now reached 5.69 percent, a 0.05 percent drop from last week.
The average five-year fixed-rate mortgage rate (75 percent LTV) is 5.26 percent, a drop of 0.13 percent from the week before.
Two-year variable-rate mortgage rates (75 percent LTV) are now averaging 5.9 percent, which also presents no increase compared to last week.
A two-year fixed-rate mortgage with 90 percent LTV is now averaging 5.64 percent, dropping 0.03 percent from last week, while the average standard variable rate (SVR) is currently resting at a staggering 8.74 percent.
Average mortgage rates across the big six lenders, including Nationwide, Santander, HSBC, Barclays Bank, NatWest, and Lloyds Bank, appear to be marginally lower on some products, however.
According to Ms Steed, the average two-year fixed-rate mortgage (75 percent LTV) has fallen to 4.81 percent this week.
The average five-year fixed-rate mortgage rate (75 percent LTV) is a higher 4.44 percent, down 0.05 percent from the previous week.
Two-year variable-rate mortgage rates (75 percent LTV) are now averaging 5.74 percent, reflecting no change from last week.
A two-year fixed-rate mortgage with 90 percent LTV is now averaging 5.6 percent, while the average standard variable rate (SVR) is currently resting at a 7.5 percent.
Ms Steed said: “It has also been reported this week that the UK Government is considering a radical approach to help first-time buyers, by introducing 99 percent loan-to-value mortgages. This would reduce the deposit that’s required to one percent of the property value (or price, whichever is lower).
“This may come as positive news to those struggling to save a deposit. But it’s worth bearing in mind that first-time buyers would still need to have enough income to be considered for the loan, which is normally capped at 4.5 times your annual salary.
“A high loan-to-value product like this is also likely to come with increased interest rates, meaning higher monthly repayments and a greater risk of negative equity, when you end up owing more on your mortgage than your home is worth.”
However, Ms Steed noted: “This scheme has not yet been confirmed. For those who are considering buying their first home this year, there are some other things you can do to help make the process a little easier.
“Do a financial review and work out what you could truly afford to spend on a mortgage. This can help you work out what properties are within your budget in the area you’re interested in.
“Get a mortgage in principle. This is a document that outlines how much a lender may be willing to lend to you if you apply for a mortgage with them, although it isn’t a guarantee.
“It will help more with budgeting, and some estate agencies will only take your offers seriously if you have one.”
Finally, Ms Steed suggested: “Speak to a whole-of-market mortgage broker. Getting a mortgage for the first time is really confusing so it may be worth speaking to an expert.
“An adviser can help you avoid common pitfalls, such as applying for a deal not suited to you. Look for whole-of-market brokers who can compare mortgages from lots of lenders to find the best one for you.”
