With the final chapter of 2016 drawing to a close, how do mortgage interest rates currently stand? From the vote to leave the EU, to various monetary policies introduced by Mark Carney, to the introduction of ever more complex mortgage lending rules, the UK housing market has seen its fair share of change and uncertainty this year. But what does this mean for interest rates now?
Wholesale interest rates (swap rates) partly dictate how much banks can lend and at what rates. They have fallen over the course of 2016 as expectations of a Base Rate increase faltered, and the Bank of England instead decided to cut the Base Rate to 0.25%. Swap rates were further impacted by the vote to leave the EU.1
The Bank of England’s Mortgage Lenders and Administrators Statistics report recorded that rates on residential mortgages fell by 8 bps in Q3 to 2.47% – the lowest rate the housing market has ever seen.2 After the Base Rate was cut to 0.25%, most lenders responded by cutting their Standard Variable Rates (SVRs) as well as headline rates. This comes after the political upheaval and market changes of 2016 and the uncertainty it brought with it; encouraging lenders to compete more fiercely for market share.
However, swap rates have increased considerably since September, suggesting a building pressure on lenders to increase their rates on fixed rate mortgages, although few have yet done so.
With some lenders withdrawing their record low mortgage deals, a few commentators have speculated that we have already seen rates hit the bottom 3; market uncertainty and rising swap rates will make it hard for lenders to maintain their low interest rates. Nonetheless, currently, there are still great rates available.
It is, however, always important to remember that the headline rate of a mortgage should not be used as the sole indicator of whether a mortgage is right for you. It is important that you take into account the fees and charges included, and whether or not the mortgage terms suit your circumstances. This is especially important when arranging a large or complex mortgage, where a bespoke product is created to help you achieve your property investment goals.
If you would like to arrange a large or complex mortgage on a residential or commercial property and want to seek advice on the best deal for you, call us on 020 7519 4985 or send us an email. No matter how large or complex your mortgage requirements one of our specialist Mortgage Managers would be happy to talk through your options with you.