Borrowers can save more than £2,000 a
year on their mortgage compared to when the Bank of England first cut
interest rates to their lowest ever level six years ago.
The bank took drastic action in March 2009 by cutting interest rates to just 0.5 per cent after Britain officially went into recession and the financial sector faced collapse following the credit crisis.
Lenders have been cutting their mortgage rates ever since and borrowers can now enjoy some of the lowest rates on record.
The average rate on a two year fixed rate is currently 2.02 per cent, less than half the 4.19 per cent rate charged by lenders in March 2009, according to financial group Moneyfacts.
It means borrowers with a mortgage of £150,000 pay £175 a month less than six years ago, the equivalent of £2,100 a year.
Rachel Springall, a spokesman at Moneyfacts, said: “March will mark the six year anniversary of when the Bank of England Bank Rate fell to 0.5 per cent and borrowers have been the ones to benefit from this consistently low level.
“Those who sat on a standard variable rate would have found the cost of their mortgage fall, saving them interest and giving them an opportunity to overpay their mortgage with the money saved.”
Government initiatives, such as its Funding for Lending Scheme and Help to Buy, have help to push mortgage rates lower.
And economists widely predict that the Bank of England will not increase the Bank Rate until next year.
But despite the lower rates, borrowers still face tighter affordability checks as a result of the Mortgage Market Review.
The bank took drastic action in March 2009 by cutting interest rates to just 0.5 per cent after Britain officially went into recession and the financial sector faced collapse following the credit crisis.
Lenders have been cutting their mortgage rates ever since and borrowers can now enjoy some of the lowest rates on record.
The average rate on a two year fixed rate is currently 2.02 per cent, less than half the 4.19 per cent rate charged by lenders in March 2009, according to financial group Moneyfacts.
It means borrowers with a mortgage of £150,000 pay £175 a month less than six years ago, the equivalent of £2,100 a year.
Rachel Springall, a spokesman at Moneyfacts, said: “March will mark the six year anniversary of when the Bank of England Bank Rate fell to 0.5 per cent and borrowers have been the ones to benefit from this consistently low level.
“Those who sat on a standard variable rate would have found the cost of their mortgage fall, saving them interest and giving them an opportunity to overpay their mortgage with the money saved.”
Government initiatives, such as its Funding for Lending Scheme and Help to Buy, have help to push mortgage rates lower.
And economists widely predict that the Bank of England will not increase the Bank Rate until next year.
But despite the lower rates, borrowers still face tighter affordability checks as a result of the Mortgage Market Review.
Jonathan Harris, of mortgage brokers
Anderson Harris, said: “Borrowers have never had it so good - at least
when it comes to mortgage rates. With lenders slashing rates to record
lows, and interest rates unlikely to rise anytime soon, there are plenty
of reasons to take the plunge and get a mortgage, or ensure you have
remortgaged so that you are on the cheapest possible rate.
Read more here
“However, the fly in the ointment is the Mortgage Market
Review and tougher mortgage rules. So while we are seeing the cheapest
rates ever, not everyone can access them. First, you need a big deposit
and second, you need to meet tighter affordability criteria. While
lenders have been cutting rates in order to attract new business, their
next move must to be ease criteria if they want to attract that large
number of borrowers who can’t remortgage or qualify for a mortgage in
the first place because lending criteria are tighter than they need to
be.
Read more here
No comments:
Post a Comment