Should you take a two year deal or a five-year fix?
Many potential borrowers and homeowners are wondering which mortgage rate they should take to get the best value for money.
At the moment, the most competitively priced rates are the five-year fixes, although there is a selection of sub-5% three, seven and ten-year fixed deals.
Banks and building societies offer Bank of England tracker rates with flexible features to make it easier to repay the mortgage early or switch to a fixed rate.
Many of Trinity Financial's clients are taking tracker mortgages or shorter-term fixes as they hope rates will decrease. They want the flexibility to lock into a new deal over the next year or two without paying high early repayment charges.
Recent figures from Santander show most of its customers are taking five-year fixes, but the overall percentage has gone down from about two-thirds to 55%. This has led to an increase in its mortgage holders taking two-year fixes and tracker rates.
Will mortgage rates come down over the coming months?
With overall mortgage lending figures down, many lenders will be keen to continue to lower their rates and offer more generous acceptance terms. Some of the big banks we deal with have massive lending targets and have stressed they are keen to do everything possible to tempt borrowers to take their mortgages.
Consensus is very mixed on whether we will get one further hike from the Bank early next month or whether rates have already peaked, with much of the fiscal tightening over the past year yet to feed through to the economy fully.
According to private bank Arbuthnot Latham, Bank of England interest rate cuts are priced in for the latter half of 2024, when the focus will switch from inflation to stimulating growth.
Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation
The information contained within was correct at the time of publication but is subject to change
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