The latest meeting of the Bank of England Monetary Policy Committee, the people that decide whether to increase interest rates or not, met last week and announced the expected no change. But more than this they cut their outlook on UK growth due to Brexit uncertainty and general trade arguments.
This means that it is now unlikely that we will see any increase in rates at all this year. What Bank of England reps have been at pains to say however, is that once there is some certainty back in the market rates will have to rise quicker than many people think to stop the economy overheating.
As a result of all this, we have seen the cost of funds decrease accordingly which means lenders could, if they wanted, cut rates even lower. However, cutting rates further is not what lenders want to do as the rate war itself has got to a point where taking things too much further is not in anyone’s real interest.
Instead, lenders have been concentrating on making improvements around affordability and criteria. We have had three lenders this week who have improved their affordability calculators to allow more borrowers to, well, borrow more! There are more options for Contractors as Coventry Building Society join in this market with a decent offering and for those looking at interest only borrowing, Santander have made changes for wealthier individuals to borrow a higher percentage on an interest only basis.
The amount you can borrow on a New Build property has increased from some lenders, the number of lenders who accept the odd credit blip has increased and a new product has been released for “mortgage prisoners” who are struggling under new affordability rules. First-time buyer products, cash backs on remortgages and new products for Buy to Let landlords have all hit the market to produce a range of choice and options, as well as low rates, that have not been seen for some time.
This all points to the fact that lenders want you. Yes, you. And not just your business, but your friends, colleagues, applicants or the random bloke in the pub. They have money to lend and are hungry.
The problem of course is wading through all the “noise” of the special offers, especially for those contemplating the do it yourself approach. We have had a few examples of clients going direct, realising that they either got the wrong product for them, or finding out the “simple” process was actually far from it.
Many also do not realise that going direct online usually means no advice. Which means no protection if things turn out wrong.
Have no fear though, that is why we exist, not just for this transaction, but for every major financial decision you have to make from now on. It’s an important part of our offering.
As for those rates then, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.35%, (3.84% APRC) and 5-year fixes from 1.75%, (3.62% APRC) whilst variable tracker rates are around from 1.29%, (3.82% APRC).
Those looking at Buy-To-Let can still obtain products from just 1.39%, (4.71% APRC) for a 2-year tracker or 5-year fixes are available from 1.79% (4.36% APRC).