Potential cut to base rate results in cheaper mortgage deals

June 6, 2016 by Brendan O'Neill

Property Market

As the Bank of England considers reducing the base rate to a level even lower than the current 0.5%, home owners are discovering some of the cheapest deals available.

According to data released by the Bank of England, borrowers are enjoying some of the lowest interest rates on mortgages, with a possibility that the rates could fall even lower. Although lenders had previously withdrawn some of their cheaper products as they thought that interest rates would increase, many have now introduced new products which are even better value.

Data from the Bank of England goes back to 2004, when the average interest rate for a mortgage was 4.55%. Five years ago, the rates had fallen to 3.84% and now mortgage deals can be found at 2.41%. The study also indicates that mortgage lending is higher now than it has been since the financial crisis began. However, figures became varied when buy to let investors rushed to secure a mortgage in March, ahead of the stamp duty rise. This resulted in the figures for April falling.

The chief economist at IHS Global Insight, Howard Archer, stated that the sector expects activity in the housing market to improve. He added that lower interest rates and a shortage of housing supply would fuel the interest. Furthermore, the interest rates for personal loans have also fallen, with a record low of 4.25% in June 2015.

To find the best mortgage deal available, buyers should seek advice from a CeMAP qualified mortgage adviser.