HomeStock MarketHouse prices are rising, but mortgage rates offer a silver lining

House prices are rising, but mortgage rates offer a silver lining


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Housing prices continue to soar, causing some buyers to question whether they can afford mortgages. If you are one of these buyers, don’t worry! There is some good news for borrowers: mortgage interest rates are currently at historically low levels. But should you rush to take advantage of these low interest rates? This is what you need to know.

Why are mortgage interest rates so low now?

Since the Bank of England’s benchmark interest rate is currently at a historic low of 0.1%, lenders are weakening each other in price (known as the “mortgage rate war”).

Borrowers can now get mortgages with interest rates below 1% (less than 1% mortgages). In fact, the cheapest interest rate you can currently get is a 0.79% two-year fixed-rate mortgage, which is provided by Platform. This weakened the previous low-0.87% of two-year fixed-rate mortgages-provided by Nationwide.

Does a lower interest rate mean you pay less?

A low-interest mortgage may be tempting, but it doesn’t necessarily mean you can pay less. It is wise to consider the full cost of the mortgage before rushing to take advantage of this opportunity.

Many mortgage lenders charge relatively high upfront fees to make up for their losses. It is wise to analyze the numbers to find out whether higher-rate mortgage transactions for a fixed period are actually more affordable than attractive short-term fixed-rate mortgage transactions.It is a good idea to use it Our online mortgage calculator Compare how much different mortgage transactions will cost you.

If you find yourself unsure of what transaction to make, it is always wise to talk to an independent mortgage consultant to get accurate numbers and tailored advice.

Are you eligible for a mortgage of less than 1%?

Generally speaking, those who are interested in mortgage loans are new buyers and homeowners who wish to remortgage. Therefore, you may need to check which mortgage rates or transactions only apply to buyers and which only apply to remortgages.

In addition, you may notice that most mortgages below 1% start at 60% LTV (loan value ratio), and a few start at 75% LTV, which means you need to make a larger deposit upfront. Higher LTV mortgages are considered high risk and higher interest rates. This means that if you cannot afford the initial deposit, you may not be eligible for a mortgage of less than 1%.

Will UK mortgage interest rates rise in 2021?

We have seen that mortgage interest rates are currently very low, and lenders are weakening each other in price. Although there is no indication that mortgage interest rates will rise, this does not mean that it will not happen. The key factors to remember are inflation and the Bank of England’s benchmark interest rate.

The National Bureau of Statistics recently revealed that Consumer price inflation in August 2021 Growth of 3.0% in the 12 months ending August 2021, up from 2.1% in the 12 months ending July.

Fortunately, the Bank of England Monetary Policy Committee voted unanimously on September 23 to maintain a 0.1% interest rate, which means that mortgage interest rates may remain low. However, if inflation continues to rise, the Bank of England may step in and raise the benchmark interest rate on November 4.

5 “must-see” mortgage tips to help save money…

The mortgage application process can seem overwhelming and sometimes even completely unaffordable. So, if you want to save money on a mortgage, where do you start?

We created this free report, “5 must-see tips for saving money on a mortgage” To help you understand where are the opportunities to save money…

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