I’ll skate over the politics as, to be honest, its all got too crazy for words. Suffice to say, however, there are still more than enough applicants around who are looking to take advantage of the current market conditions, especially where mortgage rates are concerned.
With all this going on then, it is interesting to see that in the markets we are now in the extra-ordinary position that sees the five-year SWAP rate dropping below the two-year rate for the first time since the UK’s financial crisis 11 years ago. The last time this happened was on 7th October 2008. Ten-year SWAPs are the same!
SWAP rates are the cost of longer-term funds and are the rates that indicate what the future interest rates could be. They are also what lenders base their fixed rates on.
This really is a remarkable situation and according to the chart I have that goes back to 2003, 5-year money has only been this cheap once before in September 2016. Markets expect a Base Rate cut.
How lenders respond to this in terms of how far they will drop rates remains to be seen. We have already seen a few lenders tweak rates down and for those thinking about taking out a mortgage to buy or remortgage there has hardly been a better time in this regard.
Barclays, Santander, HSBC and Accord amongst others have cut rates and we have also seen a couple of lenders offering 15-year fixes at under 3%. Meanwhile, Buy-to-Let rates these days are not that much different to residential rates where mainstream lending is concerned.
The good news is that the mortgage market itself is in fine fettle and apart from the usual grumbles from brokers around some lenders service and certainly some conveyancers, there is good consumer choice. Forgetting about the circus outside that we cannot control, there is no reason to believe that the last quarter of the year will be anything but a busy one for those in the property market.
Rate wise, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.24%, (3.71% APRC) and 5-year fixes from 1.58%, (3.55% APRC) whilst variable tracker rates are around from 1.24%, (3.80% APRC).
Those looking at Buy-To-Let can still obtain products from just 1.37%, (4.89% APRC) for a 2-year fixed or 5-year fixes are available from 1.87% (4.33% APRC).