Mortgages Rates are falling down!
The Brexit is not just a memory of last summer. Its effect is still influencing the current property market and also mortgages. Checking, the last trends, we notice that the interest rate gap between low and high loan to mortgages value is changing after the UK voted to leave Europe.
Oh really, then what is happening?
In August, The Bank of England reduced the mortgages rates to 0.25%, saving money for homeowners.
The reasons behind this decision are easy to be explained. The referendum has shaken the UK economy, slowing it down. In order to stimulate the economy and, in our case the property market.
And the Bank has approved some actions to kickstart sales and investment in the country, allowing banks to meet their targets when it comes down to lend money. The positive effects of the cuts are ultimately passed to consumers that now are paying less to get a mortgage.
The cut on rates has hit typical mortgages, but we notice now that the average interest rate charged on buyers with 25% deposit has fallen by around 0.15% and only by 0.05% for buyers willing to put down only 5% deposit.
That’s a good news then! Then will it be cheaper to have a mortgage?
Yes, definitely the cuts will reduce lending costs for all buyers closing an agreement today, but we have to point out some differences in accordance with the amount of deposit they can afford.
We have noticed already that the cut on interest rates is more beneficial for buyers able to put down a 25% of deposit.
Let’s now see that in details.
If you are a first-time buyer able to pay 5% of deposit, you will be able to save around £384 a year compared to the amount you were supposed to pay a year ago.
In the current climate, if you can increase the deposit to 10% you will be qualified to obtain a better rate on your mortgage and to save £528 per year. A good amount of money to invest, for example, for a nice holiday!
Is it then a good time to sign for a mortgage?
Interests on mortgages are lower than a year ago and, yes, it is a good time to sign for a mortgage and the number of mortgages available is increasing by 8% year by year.
Being the market less stable than it used to be before, the banks are more likely to accept to lend money to buyers with a larger deposit. The competition among banks to lend money to this type of clients is higher and they can offer better deals to them, trying to win the clients.
This, associated with a decrease in rates thanks to the action of the Bank of England, is shaping a very favorable climate for buyers willing to start house-hunting today.
If you can afford a 5% deposit, don’t despair.
It is true that the competition to lend to the buyer with smaller deposit is
The difference on rates paid by people able to afford 25% deposit and 5% deposit is around 2.24%. A small deposit means also that finding a mortgage can be slightly more difficult, as the offer of suitable products is less wide.
Don’t let this discourage you from landing your mortgage. Have a chat with a trustful mortgage advisor and he will assist you in finding the deal more suitable for you.
At the end of the day, this is a good time to find a mortgage for everybody, saving also your pockets.