Before the EU referendum took place, the British public was bombarded with doom and gloom messages about the likely outcome if the vote was revealed to be in favour of Brexit. Now we have that outcome, it seems as if there is a silver lining in store for mortgage holders and those who are looking to buy their first property.
Mortgage rates have been low for a long time now, but thanks to Brexit they have fallen further in the last week or two. And it doesn’t look as though the battle for lower rates will end anytime soon either. Experts believe that the low rates we are seeing at the moment could continue to drop, especially since news broke that a drop in the base rate could come as early as this summer.
A mortgage rate price war
Lenders are keen to attract as many customers as possible, and they are doing just that at the moment. The last month or so has seen keen competition throughout the market, both for short-term fixed rate products lasting for two or three years, and for those lasting up to 10 years.
Recent examples include a two-year fixed rate deal at just 0.99% with HSBC, providing you have a 35% deposit to put down in advance. The best deals are reserved for those who can manage 35% or more by way of a deposit. However, even those with smaller deposits can still shop around for great deals.
Ten-year deals are also looking good
The average rate for a ten-year mortgage deal was 3.46% prior to the EU referendum. Since the Brexit vote became known, this average has actually increased to 3.52%. However, as is always the case, shopping around becomes incredibly important if you are to find the best deals.
Coventry Building Society has offered what is thought to be the best deal on the market at present. This is a ten-year fixed rate mortgage at 2.39%, which attracts a fee of £999. However, customers can also opt for an alternative without a fee that has a percentage rate of 2.69%.
Is it wise to fix now?
The likelihood of an imminent drop in rates means it may be worth holding off on arranging a mortgage at the moment, as rates could get even better in the coming days.
Comments made by Bank of England Governor Mark Carney have suggested that the Bank will take some action over the summer to combat the potential effect of Brexit. Mr Carney was noted as saying the ‘economic outlook has deteriorated’. Experts in the City believe there is a high chance of a cut to the base rate in the coming weeks. There is thought to be a 78% chance it will happen in the coming week, and an 86% likelihood of it happening by August.
Even if rates do drop further, it does not necessarily mean mortgage rates will drop with them. There is likely to come a point when this doesn’t happen, so the best rates may well be those available now.