Lenders unfazed as fixed rates continue to drop
The best deals for those currently seeking a mortgage or remortgage were not affected by the Bank of England’s decision to raise interest rates to a 14-year high of 4% last week, according to online mortgage broker Better.co.uk.
Last week’s interest rate rise has left mortgage lenders unfazed, the digital broker said, and savvy shoppers could still get a five-year mortgage fixed at 4.09% with intermediary mortgage lender Platform or a two-year fix at 4.35% with Newcastle Building Society.
Mortgage rates, particularly fixed rate products, have been decreasing over the past few months, reflecting the market’s belief that interest rates are near their peak. Better.co.uk pointed out that while the Bank of England is still expected to raise rates slightly in the months ahead, lenders seemed to have priced these increases into their expectations already.
“After a very weak December for lenders, the competition to attract customers is now fierce,” Tessa Skot (pictured), chief operating officer at Better.co.uk, said. “That competition, coupled with growing confidence that an end is in sight for interest rate rises, is good news for anyone seeking a mortgage or remortgage.
“For homeowners seeking long-term fixed deals, Virgin is already offering a 10-year fixed rate mortgage at 3.99%, and shorter-term fixed deals are likely to be available at this level soon.”
The mortgage broker formerly known as Trussle, however, noted that some 1.4 million homeowners are due to remortgage this year, and if they remain loyal to their existing mortgage provider rather than shop around, they could pay a high price – around £3,900 a year.
“Brand loyalty tends to work in favour of the brands rather than the customers,” Skot commented. “£3,900 a year represents an eye-watering ‘loyalty penalty’ at any time, let alone in the middle of a cost-of-living crisis.”
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