Fixed mortgage rates fall to near record lows

Fixed mortgage rates fall to near record lows

author: Dan Griffiths

By Dan Griffiths

Lenders have cut the cost of their latest fixed-rate mortgage deals, which is good news for anyone looking to remortgage.

Back in the summer, lenders started to withdraw some of their cheapest fixed-rate deals and replace them with more expensive ones, as the Bank of England warned that it thought interest rates would start to rise around the turn of the year. For a while, it looked like the cost of fixing your mortgage had bottomed out and started to rise again. Since then, some weak inflation figures and global economic uncertainty have seen the predicted interest rate rise pushed further back into 2016. Lenders have started to trim the cost of fixed-rate mortgages once again. This could mean now is a good time to bag a fixed rate mortgage deal.

Fixed-rate mortgage costs drop

Mortgage rates of all types, including fixed and variable and all levels of deposits fell to record lows this year – which means that 2015 has been a good year for bagging a cheap mortgage deal.

At the time of writing, the best five-year fixed mortgage available is from HSBC, with an initial rate fixed at 2.19%.

Although the latest deals are slightly higher than the cheapest rates offered earlier in the year (such as a two-year fixed rate of 1.05% for a 40% deposit with Post Office Money in May), they remain cheap in comparison with previous years. By contrast, 2.83% was the lowest two-year fix last year.

Is your mortgage deal coming to an end?

According to the Bank of England, nearly 80% of new mortgages are now fixed rate products. So it’s clear many of us are more comfortable with the reassurance that the cost of our mortgage won’t go up – potentially putting us in a difficult financial situation.

So, if your mortgage deal is coming to an end, it’s time to start thinking about what you’re going to do next.

A fixed-rate mortgage is the right choice for you if you like knowing how much you’re going to be paying each and every month. And, with rates at tempting lows, it might be a wise idea to lock-in to a fixed-rate deal now, so you’re protected for the next few years if the base rate does rise.

It’s useful to bear in mind that mortgage providers carry out affordability checks when you apply for a remortgage, which means it might be worth looking at your outgoings. For example, it’s wise to rein in your spending in the months leading up to a remortgage, as the checks can be quite in depth.

If you’ve got any unused credit cards or store cards, now’s the perfect time to cancel them too. Having access to too much credit can actually work against you when applying for a mortgage, because lenders want to reduce the chance that you’ll struggle to repay all your debts. 

Disclaimer: All information and links are correct at the time of publishing.

author: Dan Griffiths

By Dan Griffiths

Fixed mortgage rates fall to near record lows Fixed mortgage rates fall to near record lows