Mortgages are cheaper and easier to access than ever before but is this golden age for cheap mortgages about to come to an end?
Now may be the best time for your clients to consider remortgaging as we could be reaching the end of a golden age for cheap mortgages according to Hargreaves Lansdown.
The latest Bank of England Credit Conditions Survey for the third quarter of 2021 shows that mortgages have been getting cheaper, with the gap between the Bank of England base rate and mortgage rates narrowing.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said the report also highlights that it has been gradually getting easier to get a mortgage, particularly for those with less equity.
Commenting she said: “We may be reaching the end of a golden age for cheap mortgages. Right now, mortgages have been getting cheaper, and banks are increasingly willing to lend, so there’s never been a better time to consider remortgaging onto a cheaper fixed-rate deal if you can.
“But with the threat of interest rate rises around the corner, you’ll need to be quick.”
Average mortgage rates have been falling. According to Moneyfacts, the average two-year fix is down 0.13% in the past month to 2.38%, and the average five-year fix down 0.8% to 2.55%. While the best deals are reserved for those with the most equity in their home, even those who have 10% equity have seen average rates drop.
Coles said: “The Bank of England figures show that banks have been more prepared to lend, particularly to people with less equity in their home. This is largely because they’re more confident about the economic outlook, but also because they want to increase their market share and they’re more prepared to take on risks. Their confidence in the future of house prices helps too.
“However, this is unlikely to last because the markets are pricing in an interest rate rise before Christmas, and another one in early 2022. And the banks won’t wait for any rate rise before they start pushing up the cost of mortgages.
“So far only the cost of ten-year fixed rates has started to rise, but we can expect shorter fixes to get more expensive as the banks become increasingly convinced that a rate rise is imminent.
“October was already set to be the busiest month of 2021 for remortgaging, according to CACI, because of the sheer number of fixed rates coming to an end, so it’s worth acting fast to snap up the best deals.”
