| Because the Bank of England's base rate is so low, homebuyers are flooding back to standard variable rate mortgages (SVRs). A spokesman for a large high street bank said that they have seen significant numbers of their borrowers moving on to and staying with SVRs to seize advantage of the low rate. SVRs are now lower than many special deal mortgages given a number of years ago. The flocks of borrowers sticking on SVR runs against the best advice given to homeowners for the last few years, where going on to your building society's or bank's standard rate was seen as the last option. This is because historically SVRs have been much higher than the markets best rate. The base rate has fallen to an all-time low, so while mortgage rates appear to be quite low at the moment, they are in fact quite high compared with the base rate. It means that until the market conditions improve you will probably be better off moving on to the SVR when your existing mortgage ends. The cost of tracker mortgages - that's the margin over the base rate - has increased, and the price of fixed mortgages at most lenders has not fallen by as much as the drop in the money markets where lenders finance their loan deals. There is very little competition. During the last six months only three of the high street banks have been giving consistently competitive low rates. Therefore there is no pressure for mortgage rates to come down. Until this position changed, mortgages will continue to look expensive when compared to base rate. It would probably pay to move a SVR if the lender you are with has a very low SVR. Two of the high street banks have promised their SVRs will always be around 2 percentage points above base rate, and as a result theirs will change as the bank rate changes. You should not expect your SVR to be slashed by the total amount of any future base rate falls since many banks are, understandably, now protecting savers, who by seven to one outnumber borrowers. And you could end up seeing your mortgage increase by more than the movement, when the base rate rises. But with mortgage fees costing upwards of 1,000 pounds for a typical 150,000 mortgage, most householders will have to work out whether the savings made by moving to the new mortgage will be more than offset by the cost of the initial fee to make the transfer. In our experience, it will be best to get a mortgage broker to do these calculations for you! For more information about finding the right kind of mortgage at the cheapest rate, it is best to go online. The internet is a great source of articles and information concerning mortgages and the best buys. Are you wanting to buy a new house and need a Mortgage, visit Brokers Online for a great deal. Brokers Online also provides its UK clients with Life Insurance, Mortgage Payment Protection Insurance and many more financial products. |
