Mortgage Rates Near Historic Lows, But How Long Can They Stay There?

Mortgage Rates Near Historic Lows, But How Long Can They Stay There?

There is a fierce price war in the financial market, a fact which has forced European lenders to cut down on borrowing charges. People with high value deposits are especially enjoying the benefits of low mortgage rates. There is a common question buzzing around about: “is this the best time to apply for home loans or is there a chance of rates being slashed further?”

UK Banks competing to serve the best deal

The recent price war in the banking sector has involved many major contenders, including the Chelsea Building Society and Tesco Bank. Tesco has cut down its rates dramatically to an all time low of 1.99% (only available to people with a huge 40% deposit). The rates are fixed for a term of two years.

This move is the latest addition in an array of huge price cuts and it may also be in response to the “Funding for Lending scheme”. The Bank of England came up with the scheme and implemented it thanks to the cheap inflow of cash offered by the European Government. They also aim to push a staggering 80 billion pounds through nationalised banks and prominent building societies to help home loan seekers and commercial enterprises.

Chelsea Building Society has also joined the fray by offering a fixed 5 year rate of just 2.99%. This deal is open to borrowers willing to provide 30% deposits. Yorkshire Building Society reacted by launching an offer of 3.04 % for a fixed 5 year term for borrowers with a deposit of just 25%. Halifax and HSBC are both offering the same low mortgage rates at 2.34% (fixed).

People applying for home loans will enjoy the currently low mortgage rates and there has been a huge rise in the number of home loans being applied for recently. This is inevitable given the borrowers are now saving a lot of money in comparison to the standard 4% and higher rates they were subjected to in the past.

Anticipated Future of the Property and Loan Markets

The mortgage rates lows are a welcome change after the crushing recession the economy was subjected to. Property markets still struggle to get a steady direction in spite of the availability of cheap home loans. However, there are positive indications of the sustainability of the current low mortgage rates (mainly due to the Funding for Lending scheme previously mentioned).

This has all affected the property buying market substantially: October showed the biggest rise in house hunters within the last 3 years, according to the recent report of Royal Institution of Chartered Surveyors (RICS), which further states that its agents have faced a steady rise (18%) of enquiries from potential buyers.

Property prices themselves have fallen down in almost all areas excluding London and the South East regions. The property market has lost its head of steam and is currently operating at almost half the rates from six months ago.

The overall indication is that it’s a good time to buy a home (and a bad time to try selling one) if you have a nice fat deposit and enough equity to make the move. Don’t be put off, but take no decision lightly in this ever-changing world.

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