Now couldn’t be a better time to get a mortgage or remortgage. Lenders are competing for your business offering rock bottom rates on lending, making the motivation to move more appealing than the Stamp Duty Holiday!
The only issue could be securing your onward purchase before these rates expire. If UK housing supply doesn’t improve those who cashed in due to the stamp duty holiday may find any gains diminished on rent. Think I’m joking, if you are trying to buy in Cornwall or Devon now it could be next year before you get a chance to even view.
UK Mortgage Rates
This however isn’t the case everywhere. So for those who do manage to secure a home this year, rates are likely to remain competitive. For 60% LTV mortgages, 2 year fixed rates fell to 1.2%, the lowest ever. Whilst rates for higher LTV products are falling they remain higher than before the pandemic. Typically a 95% LTV mortgage is 3.85% against 3.17% last year. The concern is, for how long.
Why? Inflation is rising. This is hardly surprising given we are emerging from a year long lockdown and have a larger than normal savings pot to dip into for our chrysalis moment. The increase in spending and lack of supply, not helped by Brexit, means prices are rising. To steady the ship the first port of call, typically, is to raise interest rates. The Chief economist at the Bank of England, Andy Haldane, recently was quoted saying “acting early as inflation risks mount is the best way of heading off future threats.” concluding “An ounce of inflation prevention is worth a pound in cure.” If that’s not a bumper sticker or fridge magnet somewhere, it ought to be.
You could say the writing is on the wall but I don’t believe they are going to rocket to levels worthy of serious concern, but when opting for a 1% 2 year fixed mortgage, it would be prudent to expect a higher rate in a couple of years time. So, if it means taking a slightly higher rate for a 5 year fixed term – take it.