Best mortgage deals pulled by lenders
Record low mortgage rates are beginning to disappear despite competition continuing among banks and building societies.
Lenders are pulling their record low mortgage deals as they prepare for interest rate rises, research showed today.
Financial information group Moneyfacts.co.uk said the trend for ever cheaper loans was now a thing of the past, as banks and building societies instead hiked their rates.
It said best buy interest rates on five-year fixed rate mortgages had increased on all loan-to-value (LTV) ratios in the past month, with market-leading deals jumping by 20 basis points in some cases.
It warned borrowers who wanted to take advantage of the deals still on offer and lock into a five-year fixed rate mortgage that they would need to move fast.
The rush to withdraw the loans comes after Bank of England Governor Mark Carney repeated his warning that the UK’s economic recovery meant the Monetary Policy Committee was likely to start considering raising the Bank Rate at the turn of the year.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “While competition in the mortgage market remains high, it’s clear that record low rates are starting to disappear.
“Speculation of a Bank Rate rise has affected wholesale costs, so providers have had little option but to raise their rates.
“Five-year fixed rates have been particularly affected as the likelihood of a Bank Rate rise within the next five years is high.”
The best rate available on a five-year fixed rate mortgage for someone with a 40 per cent equity stake is now 2.29 per cent, up from a record low of 1.99 per cent in May this year.
Best mortgage dealsSimilarly, the previous best buy rate of 2.14 per cent for a 65 per cent LTV five-year fixed rate mortgage has been replaced with one of 2.34 per cent.
It is not just the best buy rates that have increased, the average cost of a five-year 60 per cent LTV loan has also risen from 2.54 per cent to 2.66 per cent in the past month.
Nelson said: “Borrowers might feel as though they blinked and missed the lowest rates on the market as some deals only lasted a couple of months before they were withdrawn.
“For this reason, borrowers need to galvanize themselves now if they want to make the best of the low rates that are still around.”
But she added that even though the cost of fixed rate deals had risen from the record lows recorded earlier in the year, they were still significantly cheaper than they had been a year ago.
The most competitive five-year rate available for someone with a 25 per cent deposit was 3.28 per cent in September last year, compared with 2.48 per cent now.
Deals for people with 40 per cent to put down are also better at 2.29 per cent, down from 2.99 per cent a year earlier.
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