April 1, 2020 11:46 am
The bank of England has cut interest rates again in a further emergency response to the coronavirus pandemic, bringing the base rate down to a record low of just 0.1 per cent. This could be good news for anyone on a tracker mortgage, first-time buyers and those looking to remortgage.
Will my current mortgage repayments fall?
This depends on the type of mortgage deal you currently have. For those with a tracker mortgage, this moves in line with the BoE base rate, and is usually slightly higher. Based on this, the average mortgage of (£150,000) should see monthly repayments fall by a total of around £45-£50. However, note that fixed mortgages will not change.
If you have a variable mortgage, i.e on the lender's standard variable rate (SVR), whether you will get a lower rate in response to this change is up to the lender. If there is a change in your rate, similar changes should be made.
For those with a discounted mortgage, it works in a very similar way to a variable mortgage, except your rate will be lower than the (SVR).
If you are on a fixed rate and your initial period is coming to an end, you could potentially get a much cheaper deal if you choose to remortgage.
When will mortgage lenders drop their rates?
Most are planning to drop their rates come April 1st, with the average drop amount being 0.5%, with some even prepared to further lower their rates.
Will it become easier to get a mortgage?
Presuming you do get a mortgage, depending on what rate you succeed to secure, your repayments should be cheaper. Though given the economic fallout as a direct result of the coronavirus pandemic, lenders may be more forethoughtful about who they lend to. If your job security or income becomes vulnerable, expect some tough questions from mortgage providers as to how you will be able to afford the repayments.
It is now, more than ever absolutely essential that you make your mortgage application as strong as possible, particularly for first time buyers. Look to putting your application through a Mortgage Checklist Tool, this will aid in identifying any strengths and weaknesses, allowing you gain a clear understanding of where your application will struggle or thrive.
Contacting a mortgage broker would be the ideal next step, as they can provide a comprehensive assessment of your application, thoroughly searching the market and finding the best deal. Not only will this save you from several knock backs from lenders but can also significantly increase your chance of securing a mortgage first time.
Would now be a good time to remortgage?
Yes, if your current mortgage deal is coming to an end. We would advise thinking about remortgaging in advance as the process can take up to eight weeks.
Keep in mind that the cheapest remortgage deal can take a little longer to unfold, as the BoE rate cuts will need to filter through to lenders.
For mortgage and insurance advice, speak to one of our financial advisors today!
This post was written by Sara Dakri