But what if you are in the middle of a home purchase or remortgage, have just secured a deal and then notice the rate has been lowered?
Will you be able to switch to the lower rate? We take a look at the repricing which has been taking place this week and find out how this will impact you if you are in the midst of taking out your mortgage.
What’s happened this week?
TSB, Metro Bank, HSBC and NatWest are among the mortgage lenders to have made cuts to their fixed rate deals. The beginning of the New Year saw a number of mortgage lenders repricing and this week’s clutch of new offerings means average rates are falling further for anyone taking out a fixed-rate mortgage. There are even a few deals with rates below 4%.
Data from Moneyfacts revealed the average two-year fixed rate is 5.62% today compared to 5.71% this time last week.
The new prices are impacting all types of borrower – from those remortgaging and purchasing a home to buy-to-let investors and first-time buyers.
NatWest is one lender which has stood out among the price cutting crowd for its first-time buyer offering. Indeed, for those who have a deposit of 10% or 15% there are some rates below 5% available.
But the lender’s latest round of repricing also means there are some below 4% rates on five-year fixed rate mortgages for those remortgaging with 40% equity.
Meanwhile, Metro Bank has swooped in yesterday with cuts to buy-to-let rates which included two-year fixed rates starting at 3.99% for those who need to borrow up to 65% of their property’s value.
Sofia Jones, mortgage and insurance adviser at Penny House, who was speaking via the Newspage agency, said: “It’s great to see Metro catching up with other lenders. Product transfer rates for existing clients have dropped from 6.19% to 4.79%.
“This in itself will save one of my clients £35,200 over two years in interest alone. The rate cuts we’re seeing now are having a hugely positive impact on people’s finances.”
What do rate cuts mean for borrowers?
The fact the majority of big lenders are cutting their mortgage rates means anyone about to buy a home or remortgaging will find repayments are a little lower than they would have been if they had taken out a deal in the summer of last year.
Gemma Bennett, senior mortgage broker at The Mortgage Mum, explained: “The rate cuts mean that although many remortgagers can still expect their monthly payments to rise, that rise will be less steep that last year due the new rates being lowered.”
And what if you have been offered a mortgage, only to find the same deal has now undergone a price cut?
Bennett said you should speak to your broker as they will be able to help. “When working with a broker, they’ll be keeping an eye on ten rates and ‘rewriting’ your remortgage when a better option is available to you.
“Up to a few weeks before completion this can be organised. I myself re-wrote four cases last week ready to compete in March.”
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