Category: Mortgage

Question: I’m getting a mortgage of £180,000 on a £200,000 property. The rate I have secured looks good – it’s around 4.8 per cent over five years – but it comes with a hefty £1,499 fee. How important is the fee when getting the loan? Is it worth going for a worse rate with a lower fee?

Answer: Congratulations on securing a mortgage offer of £180,000 on a £200,000 property. This is with an appealing interest rate of 4.8 per cent over five years – I assume it’s the deal from HSBC.

It’s understandable to question the product fee of £1,499, which is on the higher end. You may be considering whether going for a lower £999 fee or a fee-free option from Virgin Money at 4.89 per cent might be a better choice. The product fee raises several important questions that need careful consideration.

In positive news for mortgage borrowers, the Bank of England finally has lowered the central interest rate for the first time in four years.

Millions of homeowners are due to come off their cheaper fixed-rate mortgage deals in the coming months, leaving many questioning what type of deal to go for next.

With a 0.25 percent cut to five percent, the Base Rate is still high and the impact won’t be felt “widely”, an expert has said. However, there are deals people may want to opt for to put them in a more “favourable” position for the years ahead.

We asked Andrew Boast, a property expert at SAM Conveyancing the current mortgage market trends, his expectations for rates over the next few months, and what length deals people should look into based on current forecasts.

Mortgage payers and business owners have been warned that higherrates are here to STAY despite the interest rate cut from the Bank of England last week. Bank documents show policymakers expect that level to be about 3.5% in three years’ time, with mortgages staying around the 4.5 per cent and five per cent level.

Claire, a maternity support worker from Portsmouth, told the Guardian newspaper her family moved into their house in January 2022 on a 1.99% two-year fixed repayment mortgage, paying £1,042 a month. Since then their mortgage payments have risen by more than £500 a month to £1,596.90.

The Bank of England has reported that the number of mortgage approvals for home buyers remained “broadly stable” in June, with 59,976 mortgages for house purchase approved, compared to 60,134 in May.

The Bank’s Money and Credit report stated: “Net mortgage approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, remained broadly stable at 60,000 in June.”

Since August last year, the base rate has stayed at 5.25 percent.

However, with inflation hitting the two percent target level for the past two months, there are hopes that interest rates can start to be reduced, possibly as early as Thursday, easing the pressure on borrowers.