Money Insider: Have fixed mortgages bottomed out?
Saturday 03 September 2011
During the last two months, we've seen the cost of fixed-rate mortgages fall to an all time low, with some jaw-dropping deals on offer.
The sharp decline in mortgage pricing mirrors the trend seen in the money markets, with swap rates for money falling from 3.24 per cent in February to just 1.84 per cent last week.
Even though we've never seen mortgages cheaper than they are now, there will still be some people delaying their decision to switch in the hope that rates will fall even further.
It is human nature to always want to get the very best deal you can, but if you hold out too long there is always the risk that the tide will turn and before you know it, rates are on the rise again.
Historically any five-year fixed-rate mortgage with a rate below 5 per cent was considered a good deal, so to see rates as low as 3.49 per cent for five years and 3.99 per cent for a 10-year term is quite remarkable.
There has been an abundance of economic bad news during the last couple of months, with the eurozone hobbling from one crisis to the next, America losing its AAA rating, extreme volatility in the stock markets and our own economy growing at just 0.2 per cent for the second quarter of 2011. It's hard to believe things can get much worse, but there are other factors which could spell the end of this period of ultra low fixed mortgage rates.
In just over a week from now the Independent Commission on Banking (ICB) is due to publish its final plans for increasing stability and competition in the UK banking sector.
As part of these reforms, there is growing expectation that the ICB will recommend to the Chancellor that the investment banking and retail banking functions of our high street banks are separated or "ring-fenced".
If this recommendation is forthcoming and subsequently implemented by George Osborne, the significant cost implications for the UK banking sector could result in consumers having to pay more for their borrowing, including mortgages.
So if you like the look of some of the latest mortgage deals but are waiting for rates to drop another 0.25 per cent, you may find they never quite reach that level.
Instead, why not look at how low your monthly repayments will be if you lock in now, and remember that this is the amount you'll be paying for the next five or 10 years depending on your choice of term.
The current best buys include a three-year fix from Coventry Building Society at 2.99 per cent with £999 fee, a five-year deal from Yorkshire Building Society at 3.69 per cent with £95 fee and 10 year-fixed at 3.99 per cent and £1495 fee from Chelsea Building Society.
How low will rates go is always the 64 million dollar question, but if your monthly budget is fairly tight and you're not comfortable with a variable rate product, then it may be sensible to consider locking in now rather than waiting for a lower rate that never materialises.
Choosing the cheapest finance for your new car
With the 61-plate registration cars hitting the forecourts, there will be many people looking at the finance options available as they trade their vehicle in for a newer model.
There are some really attractive personal loan deals to be had, particularly as lenders have been trimming rates for larger sums.
For example if you are looking to borrow £7,500 over five years the top loans are from M&S Money at 6.4 per cent APR, costing £145.76 per month or Nationwide BS at 6.6 per cent APR costing £146.42 per month. If you are an existing Nationwide current account customer, there is a preferential rate of 6.3 per cent APR.
Many car retailers will offer their own finance, so if you're checking to compare whether it is cheaper than the banks, ask for the total cost of credit (including all fees) to enable you to make a true comparison.
If it is a smaller sum you're after, some garages may allow you to buy your vehicle via credit card, although not all car retailers will offer this option.
The best 0 per cent credit cards for buys are M&S Money and Tesco Clubcard – both 0 per cent for 15 months so you could benefit from interest-free car repayments during this time and then switch the remaining balance to a loan when the 0 per cent deal ends.
Alternatively, you could pay on a credit card and then arrange to switch your balance to a 0 per cent balance transfer – with up to 22 months currently available from Barclaycard Platinum.
Whichever type of finance you opt for, you'll need a near A1 credit record to be accepted, especially if you're after the best buy deals.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens