Unheard of mortgage deals

Enable’s IFA’s in Bishop’s Stortford have helped many arrange their mortgages and until recently a 1.5% mortgage deal was virtually unheard of. But currently there are already two-year fixed deal at less than 1.5 per cent out there and some mortgage experts think there may be room for even lower rates. Ray Boulger of the independent mortgage consultant John Charcol believes that “falling gilt yields could result in a drop in fixed-rate mortgage pricing.”

Gilt yields represent the rate of interest paid on government bonds. Their rates in turn affect so-called swap rates, the cost of getting fixed-term funding on the money markets for lenders. Lenders are then using that fixed-term funding to be able to offer fixed-rate mortgages to consumers. So if gilt yields fall, swap rates will fall, meaning it will be cheaper for lenders to get funding, which should, in theory, lead to cheaper loans for us all.

Recently the UK 10-year benchmark gilt yield fell to an all-time low of 1.3 per cent and the five-year gilt yield fell to 0.67 per cent and the two-year to 0.3 per cent. Essentially the yield on both five- and 10-year gilts has fallen by nearly 40 basis points in the past month. “Yields have fallen so fast that mortgage lenders are now well behind the curve with their fixed-rate pricing, leaving scope for some significant rate cuts on fixed rates,” said Boulger, however, “Although this is good news in the short term for anyone wanting a new mortgage, the rapidly increasing global problems remain a major concern and could lead to lenders reassessing their appetite to lend in the medium term,” he warned. Enable’s IFAs can help you find the right mortgage at the right rates for you.

Your home may be repossessed if you do not keep up repayments on your mortgage.

http://www.independent.co.uk/money/how-low-can-they-go-home-loans-edge-towards-1-a6877621.html

Issued by: Enable Independent Financial Life Planners • 
25c North Street, Bishops Stortford, Herts CM23 2LD • Telephone: 01279 755950 - Fax: 01279 657339
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