The price war on mortgage products in 2021

03 November 2021, by Matt Stevens

The competition within the mortgage market among lenders has taken interest rates on products to historic lows. This war on mortgage products is a great opportunity for both homebuyers looking for a new mortgage deal, and for those looking to move home.

New data shows that average rates are now lower, which means that homeowners are now paying less than when they locked their deals. At the time of writing, one of the lowest rates for a 2 year fix remortgage was 0.74%.

On average, the trend for rates on mortgage products continues its decline, with 2, 3, 5, and 10-year fixed rates mortgages falling as follows:

  • The lowest rate for a 2-year fixed remortgage fell to 2.45% for 95% LTV (or 95% mortgage). At 90% LTV, the rate dropped to1.69% and, at 85% LTV, the rate went down to 1.34%%.
  • For a 3-year fixed mortgage, again, the most notable changes occurred for 95% and 90% mortgages, where the average rate for each decreased.
  • The pattern is repeated also in the case of 5-year fixed-rate mortgages. For an LTV of 95% the rates could be as low as 2.89%, at 90% LTV 2.39%%, and at 85% LTV the rate can be as low as 1.91%.
  • The 10-year fixed rate had changes too up to 75% LTV, with one lender offering a 1.95% fixed rate.

All these changes are influencing the mortgage market positively for customers; different lenders have been implementing new offers for their clients. For example, reducing rates by up to 0.30% across 80% and 95% mortgages. Others have chosen to cut up to 0.30% on a selection of products for 80% mortgages and above.

Is now a good time to get a mortgage? Will mortgage rates stay low?

If you are thinking of taking a mortgage or remortgaging, you could benefit from the current mortgage market situation. However, there are many factors that you should consider before applying for or committing to a mortgage. Asking for advice from a professional mortgage broker is your best choice. Brokers are close to the market and its changes. They also have access to numerous lenders, giving you access to the best deals on the market some of which are not available to individuals.

Mortgage interest rates are set by lenders. They set rates on the back of many different factors such as the Bank of England base rate, the trends in the housing market, and how the economic landscape looks.

The return of the normal stamp duty rate could mean lower sale volumes in the housing market and the continuation of the rates war. However, if inflation rises, the Bank of England could take counteracting measures like raising the base rate, making mortgage lenders raise their rates too.

If you lock a fixed rate deal before circumstances change, you could benefit from the current rates despite the potential changes in the market. However, there are many variables involved, and the scenario could change rapidly. So, it’s advisable to seek expert advice for peace of mind.

At The Mortgage Genie, our approachable team can help you with any questions you may have about mortgages and insurance products, no matter if you are a first-time buyer or looking to remortgage. Our advisors always offer honest advice and can give you access to the best deals in the market. 

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