Big mortgage dilemma: Home in quick on falling rates or hold back?
Mark Harris, of mortgage broker SPF Private Clients, said: “There are some great fixed rates available. But make sure you don't fix for longer than you are absolutely sure about or you will have to pay a hefty redemption penalty to get out of the
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Big mortgage dilemma: Home in quick on falling rates or hold back? - Mirror.co.uk
And the Council Of Mortgage Lenders last week reported a 20 per cent increase in the number of first-time buyers in March compared with February.
Several lenders have now slashed their mortgages again, with many cutting fixed-rate deals, especially for those with smaller deposits.
According to Moneyfacts.co.uk, the average two-year fixed rate for a buyer with a 10 per cent deposit was 5.44 per cent a year ago and 5.30 per cent six months ago. Today the average rate is 4.5 per cent.
Similarly, a year ago the average two-year fixed rate for someone with a five per cent deposit was 5.79 per cent, but this has fallen to 5.49 per cent.
Mark Harris, of mortgage broker SPF Private Clients, said: “There are some great fixed rates available. But make sure you don’t fix for longer than you are absolutely sure about or you will have to pay a hefty redemption penalty to get out of the mortgage.”
The Nationwide Building Society last week cut its three-year fixed rate mortgage to 4.34 per cent on a 10 per cent deposit, with a £400 fee for first-time buyers. And the Clydesdale and Yorkshire banks lowered their three-year fixed-rates with a five per cent deposit to 5.49 per cent, or 4.49 per cent with a 10 per cent deposit, both with no arrangement fee.
One of the cheapest two-year fixed-rate mortgages available with a 10 per cent deposit is 4.04 per cent from Norwich & Peterborough Building Society, with an arrangement fee of £295.
First Direct has a three-year fixed rate of 3.89 per cent with a 10 per cent deposit, but with a £999 fee. It also offers 4.19 per cent for three years with no arrangement fee.
The bigger the deposit you have, the better rates you get. If you have a 40 per cent deposit, or the equivalent amount of equity in your home and want to lock it in for the long term, Santander on Friday launched its lowest ever 10-year fix, at 3.94 per cent with a £995 fee.
If you don’t want to lock in for so long, and have a 35 per cent deposit or the same in equity, First Direct has slashed its cheapest fixed rate from 2.64 per cent to 2.49 per cent, but with a hefty £1,999 fee. It also offers a 2.69 per cent five-year deal with a £499 arrangement fee.
David Hollingworth, of London & Country mortgage brokers says: “There is now a host of five-year fixed rates below three per cent.
"But be aware that the very lowest rates often carry big fees which can have a devastating impact on any savings from choosing a lower rate.
"The dilemma is whether to hold off fixing in the hope of even cheaper mortgages coming to market.
“However, for many the chance of trimming another 0.10 per cent from a rate will be far outweighed by slashing their mortgage rate as soon as possible, rather than pay another month at a high standard rate... and no one wants to miss out on the property they want while waiting for rates to drop further.”>