Back in March 2020, the Bank of England reduced interest rates to their lowest level in history. While this may have been bad news for savers, it’s had a positive impact on the mortgage market where the cost of borrowing has continued to fall.
Now, lenders including HSBC, Nationwide, and TSB have even started to offer deals at rates below 1%.
Read on for details of these exceptionally low rates, and why now is a great time to review your mortgage and save money.
“Perfect storm” results in a range of sub-1% deals
According to industry experts What Mortgage?, there were, as of 17 June, 14 deals on the market which had “sub-1%” rates.
Some of these deals are available through high street lenders such as TSB and Nationwide, while others are through smaller, regional building societies including Leek United and Cumberland.
It’s also worth noting that several of these deals can only be accessed through an intermediary such as Altura. This is one of the benefits of working with a professional, as we often have access to great mortgage deals that you can’t access directly on the high street.
For example, a current 0.95% deal through Platform is only available through selected intermediaries.
Money Saving Expert says the current low rates are because of a “perfect storm” of factors, including:
- Interest rates sitting at their lowest level in history
- A house-buying boom boosted by the Stamp Duty holiday and a desire for many homeowners to seek out homes more suited to a new way of life
- Banks with a lot of cash to lend because of the billions in savings people put aside during the pandemic.
Of course, switching to a rate below 1% could save you a considerable sum, as we’ll see next.
Switching your mortgage could save you thousands each year
If your fixed-, variable- or tracker-rate mortgage deal is coming to an end in the next few months, or you’re sitting on your lender’s standard variable rate (SVR), then switching your mortgage could result in significant savings.
The table below shows the monthly repayments on a £300,000 and a £500,000 repayment mortgage over 25 years on the average standard variable rate in the UK versus taking one of the current “sub-1%” deals at 0.99%. It assumes any fees are paid up front.
Source: Which? mortgage calculator
As you can see, switching to one of these sub-1% deals could save you more than £375 each month on a £300,000 mortgage when compared to sitting on the average SVR in the UK. You’d potentially save more than £600 each month on a £500,000 loan.
Of course, these deals won’t be available to everyone which is, again, why it’s important to speak to a professional. For example, most of them require you to have a deposit or equity of between 25% and 40%.
You also need to consider that all these sub-1% deals come with a booking, arrangement, or reservation fee. These can range from £999 up to £1,999 depending on the lender and the deal.
We’ve looked before at how paying a fee for a mortgage deal on a larger loan can end up saving you money. We can consider the overall cost of a range of options for you to find you the one that offers the best outcome, based on your circumstances and loan size.
We can find the right lender for you
Switching your mortgage to a sub-1% deal, or one of the many other ultra-competitive deals available right now, could save you thousands of pounds each year.
However, finding a lender prepared to agree the mortgage you need is, of course, vital. There’s no point wasting your time applying for a 0.99% deal only to see the lender reject your application!
The pandemic has changed the approach of many lenders and so it’s never been more important to seek professional help.
If your income has been affected by Covid-19 – perhaps your business profits fell, you were furloughed, or you’ve taken advantage of government support schemes – then you could find some lenders look unfavourably on your application.
Indeed, we wrote recently about how the pandemic has affected self-employed borrowers and the underwriting changes many banks and building societies have made.
As we work closely with many lenders, we know who is likely to agree the mortgage you need based on your specific circumstances. We can take the hassle out of the application process and search the market for you to find the most appropriate deal for your needs – potentially saving you a considerable amount in the process.
Get in touch
To find out more about these ultra-low interest rate deals, and how we can help you find the borrowing you need, please get in touch.
Email info@alturafin.com or call us on +44 (0) 20 3786 7270.
