Borrowers to benefit from a mortgage price war

March 1, 2016 by Brendan O'Neill

Borrowers

Borrowers may be faced with some of the lowest ever mortgage deals, as lenders compete fiercely to secure custom.

For the first time ever, mortgage rates may fall to less than 1%, saving homeowners hundreds of pounds on their mortgages. The prediction was given by the chief executive of the Yorkshire Building Society, Chris Pilling.

The announcement was viewed by analysts as “great news for borrowers”. According to Pilling, paying off a home loan will soon be at its cheapest level, as lenders engage in a price war. Deals fixed for two years, which is one of the most popular deals, may fall below 1% before the end of the year.

A family with a mortgage of £150,000 would see savings of £130 a year if this was to happen. The current lowest deal is 1.05% offered by the Post Office for a two year fixed rate mortgage. Pilling adds that the rates could go even lower, saying:

“If we go as low as one per cent again, you can’t say no to anything… and competition (between mortgage lenders) has been significantly stronger in recent months.”

Yorkshire Building Society recently lowered its two year fixed rate deal to 1.14%, which is now the lowest two year fixed rate deal available. Pilling did warn savers, who may not be as happy about the low interest rates.

There are various rates and deals available, making the choice confusing for most borrowers. Seeking professional help from a mortgage adviser who has taken CeMAP training, will make it easier to make the right choice.