Mortgage Rates Are Low, But Remember History
11.09.17As we continue in this period of low rates which, according to the latest views from most economists will see no rate rise until 2019, it is easy to get rather nonchalant about the low rates on offer.
It always amuses and frustrates me in equal measure when a client screws their face up at the mention of a sub-2% rate as seeming a little high when, historically speaking at least, these rates are absolutely crazy.
So, with the cost of 2-year money falling again this week to stand at just 0.54% and 5-year money at 0.77%, I delved back into the archives and found an article I wrote some 10 years ago to put this in context.
At that point, 2-year money stood at 5.85% and 5-years at 5.66% – some difference!
Looking at the corresponding rates at that time we were waxing lyrical about a 2-year fixed at 5.89% and 5-year fixed rates at 5.69%. There was also an “impressive” 10-year fixed rate from Woolwich at 5.59%. How times have changed!
Fast forward to today and with 2-year fixes available at 1.03%, (3.35% APRC) and 5-year fixes from 1.59%, (2.93% APRC) you can really see why First-Time buyers are keen to take advantage. As for the 10-year fixes, well these now stand at 2.49%, (2.99% APRC).
Even Buy-To-Let products are now available from just 1.28%, (4.01% APRC) for a 2-year fix.
Of course, there is another side to this. The fact that history tells us that these rates should not be taken for granted and to be aware that they can easily move upwards towards more historical levels once more, is realistic at some stage. The key question is that we just do not know when that “some stage” will come.
For the time being at least, this does not look like being any time soon.
Written by Andrew Montlake
Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.
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