Want to fix your mortgage? Get a hurry on…
Bankers are pulling their best fixed rate deals like there’s no tomorrow.
But you can use a little-known trick of timing to avoid missing out on a long-lasting low rate feast. Here’s what lenders are up to — and if you want to lock in lower mortgage rates any time in the next three months, here’s why you should act straight away.
Decent fixed rates disappearing fast
Long term fixed rate remortgages give you the chance to lock in a low monthly mortgage payment for, well, long enough to give you that stress-free ‘ahhhhh’ feeling.
But uh oh, let’s not be complacent and think we’ll get one ‘soon’. If you’re even a little concerned that base rates will start the long climb back to their traditional average of around 5% — (will they? Don’t ask us for a crystal ball, even the economic boffins are merely guessing) — you won’t want the “Great Low Interest Rate Bonanza, 2009-2011″ to pass you by.
So here’s the bad news: lenders are already getting the jitters. Their fingers are on the ‘swap rates’ pulse — those are the obscure rates that change daily in the background of the money markets and reflect banks’ confidence in whether or not the overall cost of borrowing will rise.
And the signs aren’t great if you were thinking of getting a good rate sometime in the near future.
Look who’s already cut their deals…
• First Direct has withdrawn its range of fixed-rate mortgages from the market, including its best buy five-year fix at 3.89%, and replaced them with rates up to 0.4% higher
• NatWest cancelled its attractive 5-year fixed rate of 3.75% (for 50 per cent Loan To Value mortgages) and bumped the rate to 3.95 per cent
• Yorkshire Building Society is increasing rates on its three, five and ten-year fixed rates by up to 0.2%
• Skipton Building Society withdrew its entire range of 5-year fixed rate mortgages and will replace them with increased rates
• Santander killed off its friendly 5-year first time buyers’ 5.99% fixed rate mortgage this week as well.
Once a big enough bunch of lenders start to pull their best deals, the rest are sure to fall like dominoes. Time to get your mortgage adviser on the phone and find out whose good rates are still active!
But there’s good news if you want to lock down your mortgage payment for five years before the best rates vanish — because you can exploit a little-used trick of timing to tie the bank down to a deal even before you need it.
It’s all in the timing
Here’s the thing: you don’t have to actually remortgage now. You just have to apply now. This works for remortgages because most mortgage deals allow 3 or 4 months for you to complete the transaction. This is to make sure home movers have plenty of time to arrange everything, but if you’re staying put, all you need are a few bits of paper.
With many lenders offering free valuations and legal work on remortgages, this means your financial risk for securing a low fixed-rate remortgage deal now is limited. True: it might cost you £100-150 in reservation fees to get that application in. But you can then sit, wait and save up for any other product fees which won’t be due until April at the earliest.
And if something happens in the meantime that means you change your mind about remortgaging? No ties: you can walk away. Better than missing out altogether!