Roy's Blog
The Director of Mortgage Beaters, Roy Bookman, knows what's going on in the ever-changing world of mortgages. So what's new, Roy?
“Are these the first greenshoots?”
Thursday, 22 May 2008
The increasing cost of oil and food is making it difficult for the Governor of the Bank of England to do what all homeowners want- which is to announce that the base rate will be cut to 4.75 per cent.
The good news is that the Halifax have reduced their 3 and 5 year Product Transfer fixed rates by 0.1 or 0.2% and their 3 year tracker rate by 0.2%. In addition they are increasing the maximum loan size on the tracker up to 75% LTV from £500,000 to £2m.
These Product Transfer rates are only available to existing customers coming to the end of a deal but there will be many of them because two years ago they were offering very competitive rates of - 4.69% for purchases and 4.79% for remortgages. To me this seems to indicate that not only do the Halifax want to keep their customers, but we could be seeing an increasing number of lenders battling to increase their market share.
If this is the case watch out for similar cuts from other lenders.
# posted by Roy Bookman : 14:37
Mortgage brokers are really struggling due to several factors. First the interest in lending has dropped. Then the deals that lenders now offer are very poor. For deals see http://www.mortgagehome.co.uk And finally lenders are not just not keen to lend.
Well the last week has seen several interesting developments in the mortgage world.
Firstly, the Bank of England has slashed the base rate by 1.5%, meaning the base rate is now only 3%.
This should be particularly beneficial for anyone currently on a tracker but is unlikely to have a direct effect on new rates. However many lenders have passed on this cut in the form of a reduction in their Standard Variable Rates.
Secondly, as a result of the base rate cut, the 3 month LIBOR rate has been cut by 1%, now sitting at just below 4.5%.
The LIBOR rate is the rate at which banks lend to each other and will have a direct effect on the costs to the banks of obtaining funds, and therefore enable them to reduce mortgage rates.
As a result of the above, nearly all tracker rates have been withdrawn from the market to be repriced. The next week or so should be interesting as new rates gradually begin to appear again.
But what does this mean to the individual who may be about to remortgage?
Well, two things.
Firstly, the rate that you will revert to when your current deal comes to an end, the lenders Standard Variable Rate(SVR,)will probably be much lower that it would have been a week ago. This may mean that you are better off sitting on the SVR with your current lender rather than moving elsewhere or taking another deal with them.
Secondly, we are due to see a lot of new rates coming out which may well be a lot more competitive than you were expecting. So there could be cheaper options out there.
Also, depending on how rates are repriced, it may be a good time to fix your mortgage rate, although this will depend on your circumstances.
If you are due to come out of your current deal any time soon, speak to an independent Mortgage broker. They will be able to tell you what the best deals out there are for your circumstances and tell you whether it is worth you moving at all or, as is now often the case, you are better off staying where you are.
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