Lenders slash sub-one per cent rates further as price war rages on
According to the broker, most of the demand is coming from remortgage customers, who apply for 74 per cent of leads for mortgages priced at less than one per cent.
Miles Robinson, head of mortgages at Trussle, said: “Buyers now have the opportunity to guarantee record low interest on their mortgage payments for up to five years, offering them certainty and stability.”
This is great news but buyers will need significant deposits, typically of around 40 per cent. As a result, those who can only afford high loan-to-value (LTV) products, like first time buyers, are still missing out on the lowest interest rates available.
Robinson added: “This is creating a real disparity in fairness across the market where those with the least capital are unable to take advantage of interest rates below one per cent. We hope to see more low interest fixed term products become available. But, we urge lenders to ensure that all buyers have the opportunity to access the most competitive rates.”
Greg Cunnington, director of lender relationships and new homes at Alexander Hall Associates, said: “The record low mortgage rates we currently see in the mortgage market reflect the desire of the main lenders to lend right now, and I definitely agree with Trussle that we are in the middle of one of the most competitive ‘price wars’ in the market I have seen.
“With the strong capital positions of many of the major lenders, it wouldn’t surprise me to see rates drop slightly more in the coming weeks too.”
Borrowers need a 40 per cent deposit to achieve the top market deals, but mortgage rates continue to fall across all loan to value tiers.
David Hollingworth, associate director at L&C Mortgages, said: “The fact that we not only have two, three and five-year fixed rates below one per cent but also a growing number of lenders offering them, underlines just how competitive the market is right now as lenders continuously tweak and reprice to keep up. These rates will help attract borrowers and signal that lenders are eager for their business but there’s still a need for advice as they recognise that a great headline rate is only part of the story alongside criteria and fees.”
He added: “Although these rates require substantial deposits, the fierce competition in the market is also helping to drive down rates for those with a small deposit. However, I don’t think that we can expect to see parity with the sub one per cent deals which are likely to remain the preserve of those with a big slice of equity.”