Most traditional and buy-to-let mortgages have come down in cost over the past three months, according to Mortgage Brain’s quarterly product data analysis, as cheap trackers benefit from predictions the base rate will remain low for longer.
Interest rates on mortgage borrowing have come dwon across the board.
Since the start of the year, the cost of the lowest rate 90 per cent loan-to-value five-year tracker fell 10 per cent since January, and is now available with a rate of 2.65 per cent - as of 1 April 2016.
By comparison, the cost of the lowest rate 90 per cent five-year fixed (60 and 90 per cent LTV), and the lowest rate two year tracker (60 per cent LTV), all cost 1 per cent less than they did three months ago.
This 10 per cent cost reduction for the five-year tracker equates to a potential £972 yearly saving on a £150,000 mortgage, when compared to this time last year.
Mortgage Brain calculated the 1 per cent cut to the cost of the lowest rate 90 per cent LTV five-year fix equates to a potential £126 annualised saving over the past quarter, or £648 per annum, when compared to last April.
The lowest rate five-year tracker with a 60 per cent LTV (1.99 per cent), while seeing no change in cost over the past three months, is 12 per cent less than it was 12 months ago, equating to potential £1,098 annualised saving on a £150,000 mortgage.
The data also showed cost reductions for the majority of products analysed in the buy-to-let market, with the lowest rate two-year fixed rate with an 80 per cent LTV, for example, now 5 per cent less than it was in January.
The lowest rate (3.99 per cent) five-year fixed with an 80 per cent LTV cost 4 per cent less than it did three months ago and offers borrowers a potential saving of £39 per month or £468 per annum on a £150,000 mortgage when compared to April 2015.
Mortgage Brain’s chief executive Mark Lofthouse said these latest figures, coupled with recent predictions that possible base rate rises are not likely until 2017, will be welcome news to potential homebuyers, or those looking to re-mortgage.
“Our three, six, and 12 month, analysis of the most popular mainstream and buy-to-let mortgages shows considerable rate and cost reductions which means that borrowers looking to take out a mortgage today can benefit from lower monthly repayments.”
Jonathan Harris, director of mortgage broker Anderson Harris, agreed that mortgage rates remain extremely competitive, because it looks as though base rate isn’t going anywhere any time soon.
“Subsequently, cheap base-rate trackers are very appealing to clients, particularly those with no early repayment charges. One wonders how much lower mortgage rates can go - it is highly likely that lenders will have to tweak criteria if they are to attract business - which is great news for borrowers.”
peter.walker@ft.com
