Mortgage Interest Rates – Keeping your head in the silly season:
As we head towards the winter months we are being greeted by a flood of new mortgage interest rates. January is traditionally the month where mortgage lenders slash their mortgage interest rates in a bid to reinvigorate the market after Christmas but it seems that silly season has come a little earlier this year. There are number reasons for this and of course the on-going debate around interest rates is certainly a part of it. The other likely driver is the slight slowdown in the market that we saw during the summer months and into September. Lenders, conscious that the end of the year is now in sight, are under pressure to meet completion targets and are looking to bolster their figures in the last part of the year. Many have also spent a good chunk of this year working to integrate the various changes brought about following the Mortgage Market Review and are perhaps only now feeling confident enough to push forward with new deals.
So what does that mean for the consumer? Should you consider taking the plunge and push ahead with a new mortgage or remortgage? It’s certainly always advisable to make sure that you have the right product for your circumstances and so with some decent deals around it’s worth taking a look at your current mortgage and making sure it’s still the best option for you. If you are tempted by the opportunity to guarantee your mortgage repayments for the immediate future then there are some great fixed deals available that are worth considering.
But before you immerse yourself in the best buy tables is important to remember that the rates we are seeing are the headline rates and will not necessarily be the rate that all borrowers will be offered. This means that unlike credit card or unsecured loans it’s harder to draw direct comparisons between products because the vast array of criteria applied by lenders will be what ultimately dictates the rate you are offered.
The main criteria that will affect the rate at which lenders are willing to offer are your credit score, the current loan to value rate on your property, or your deposit if you are a first time buyer, and of course your income.
And now, following the changes brought about by the Mortgage Market Review earlier this year, lenders will also need to take into account the affordability criteria. This looks at essential outgoings as well as day to day living costs, and will enable the lender to assess whether the borrower can afford mortgage repayment not only now, but in the future if mortgage rates rise.
The final factor to take in to account when looking at rates is the impact of arrangement fees on the overall cost of the mortgage over the life of a particular deal. These fees vary enormously from a £0 to £2,000 plus. In fact some low interest rate mortgages have such high arrangement fees associated with them that they may cancel out the benefit of switching. So it’s important to factor these into your overall calculations , total fees and interest payable over a selected period of time should be considered not just a headline rate.
So, definitely a good time to be taking a look at your circumstances and taking advantage of some of the great rates out there but do remember the headline rate is not always the rate on offer for all borrowers so it’s worth drilling down a little deeper, getting some advice and making sure you are getting the best deal for you –not just the one that’s topping the best buy tables.