The rates at which banks lend to one another are currently low, which has seen a number of good fixed-rate mortgages released
It’s probably too late for Santander mortgage borrowers to remortgage in time to beat the 0.5% rise in its standard variable rate (SVR) on 1 October, but it’s not too late to save money by switching loans.
The bank is set to raise its SVR to 4.74%, adding £26 a month to the cost of a £100,000 mortgage. It blames the rising cost of funding mortgages and paying interest on deposits, despite a static Bank of England base rate during the past three years.
It is not alone: several other lenders have also increased their SVR this year, including the Halifax (3.5% to 3.99% in May), the Bank of Ireland (a stepped change from 2.99% to 3.99% in June and another rise of 0.5% to 4.49% in September), the Co-operative (4.24% to 4.74% in May), Yorkshire and Clydesdale banks (4.59% to 4.95% in May), and Cambridge building society (4.59% to 4.99% last week).
But according to David Hollingworth of mortgage broker London & Country there is no need for homeowners to suffer the changes, as there are plenty of attractive remortgage deals available. “Swap rates [the rates at which banks lend to each other] are very low, which has led to fixed-rate mortgages improving significantly in recent months,” he said.
“Getting a mortgage offer can take at least a couple of weeks, and often more for those lenders with the best rates as they deal with higher volumes of business,” Hollingworth added. “It therefore makes sense to get the ball rolling sooner rather than later and to be sure to provide any supporting documentation promptly to ease the process.”
For those needing a loan equivalent to 60% or less of the value of their property, HSBC offers a lifetime tracker set 2.14% above the BoE base rate for the life of the mortgage, which has a £999 fee. The bank is also offering a five-year fix at 3.29% on 60% loan-to-value (LTV) loans with a £499 fee.
At a slightly higher LTV of 70%, Tesco Bank offers a rate of 3.39% fixed for five years with a £995 fee. Those interested in a shorter-term fix could opt for a two-year fix from Principality building society at 2.79% for 60% LTV mortgages with a £999 fee.
For those with smaller amounts of equity in their homes, mortgage broker SPF Private Clients suggests a two-year fixed rate at 4.29% from Hanley Economic building society. Loans are available up to 90% LTV and have a £900 fee.
Alternatively, First Direct is offering loans up to 85% LTV fixed at 4.49% for five years with no fee, or a lifetime tracker mortgage set at 4.09% over base (currently 4.59%) with no fee or early redemption charges up to 90% LTV.
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