Competition on mortgage rates between banks has resulted in reduced costs, with a typical home loan now costing approximately £1,700 less than it did four weeks ago, due to a number of recent deals and the Bank of England base rate.
If a family was to remortgage a loan of £200,000, in five years they would be £1.700 better off than if they had remortgaged four weeks previously.
First Direct lowered their mortgage rates to a record low, allowing borrowers to choose a rate of 2.89 per cent for ten years, or a rate of 2.28 per cent for five years. They followed in the footsteps of Barclays, who have also lowered their ten and five year rates recently, to 2.94 and 2.29 per cent respectively.
These deals are generally focused on people facing a deposit of 35 per cent or more, but for those who have smaller deposits, such as a deposit of 10 per cent, lenders are still trying to reduce their rates to attract more borrowers.
A spokesman for SPR Private Clients, a financial services company, said: “Lenders are keen to advance more money this year and they’re cutting their prices to attract customers. Banks will hope to make money by selling customers other products such as current accounts and credit cards.”
The Bank of England base rate again remained fixed at 0.5 per cent, and is one of the factors that has resulted in a fall in costs. It is expected to remain at this rate for the rest of the year by some economic experts.
