14 May 2021

Sub-1 per cent fixed-rate mortgage launches as lenders eager to lend

Just when it seemed as though mortgage rates couldn’t go any lower, a lender has launched a remortgage product at sub-1 per cent. Hot on the heels of Hinckley & Rugby building society’s sub-1 per cent discounted-variable rate which launched last month, TSB has introduced a two-year fixed deal, giving buyers a low rate combined with the security of not seeing their mortgage payments rise for at least two years.

With five-year fixed rates starting from a not-much-higher 1.19 per cent, giving security for the medium-term at a low rate, there are some excellent products out there to tempt borrowers. This availability of cheap credit, combined with the stamp duty holiday, is fuelling the housing boom and resulting in a hot market, with demand far outstripping supply. Halifax reported earlier this week that house prices surged to a record high in April; just a year after the market ground to a halt as a result of the pandemic, the average home is now worth an extra £20,000 – quite the achievement.

This lack of stock for sale, combined with the fact that we are not building enough to meet demand for housing, is not only pushing up prices but also creating affordability issues for first-time buyers and second-steppers. The government mortgage guarantee scheme, resulting in increased choice of 95 per cent mortgages, may help buyers with a small deposit get on the housing ladder or move up it, but is also likely to push up prices further still.

Advice is more important than ever for those considering getting on the housing ladder, moving up to a bigger home, or downsizing. A mortgage broker such as SPF Private Clients can help guide you through the process from start-to-finish, ensuring you get the right deal and don’t pay more than you need to. Please get in touch for more information.

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