James Keable, Mortgage Services Director at Capital Private Finance explains the current mortgage market and explores why delaying on your purchase could end up costing you more in the long run…
You may have heard in the press that fixed rates may actually come down over the coming weeks and months, even though Bank of England base rates are going up and are likely to continue to do so.
This has meant that some potential homebuyers have put things on hold, waiting for the cheaper fixed rates to materialise. It is very unlikely that they will return to the 1 or 2% levels that we have grown used to anytime soon, but they may reduce by another 0.5% or so over the next couple of months.
It might be counter-intuitive but by waiting for lower fixed rates to arrive you could actually be costing yourself more on mortgage costs! The reason why is down to something called the Swap interest rate market (SWAPS). SWAPS try to predict the future when it comes to interest rates and they have for some time, been predicting that the Bank of England would be putting up rates significantly over the coming year to as high as 6 or 7%. Lenders have been creating their fixed rate mortgage products based on these predictions and that is why fixed rates have been so much higher than the actual Bank of England rate.
However, since the infamous mini budget at the back end of 2022, the market has calmed and predictions for future interest rates (SWAPS) have been coming down. That is why fixed rates have been reducing even though Bank of England rates have and will probably continue to go up (just not nearly so high as was previously priced in). So is now a good time to buy? Well, yes it could be because of tracker rate mortgages. As the name suggests, they track the Bank of England Base rate, which means that they can actually be cheaper right now than fixed rates. The risk is that these rates will go up if the Bank of England rate goes up, so may only be cheaper for a limited time. The good thing is that you can get a range of tracker products, which enable you to swap out of them onto a fixed product without penalty. This means as soon as it becomes more cost effective to fix, you can do so and secure the best rate possible for the longer term, getting the best of both worlds.
That is where your Capital Private Finance Expert comes in. We know all about how markets work and how to explain the potential benefits or pitfalls of different approaches, which help you to choose the best option for you, helping you find your dream home right now.
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The experts at Capital Private Finance have access to a vast array of mortgage products and can access a range of specialist products not available to all brokers. This means that if it is possible to arrange finance, then we should be able to help you achieve your goals.
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A FEE WILL BE PAYABLE FOR ARRANGING YOUR MORTGAGE. YOUR CONSULTANT WILL CONFIRM THE AMOUNT BEFORE YOU CHOOSE TO PROCEED.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU RE-MORTGAGE.
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