According to the latest research from Moneyfacts.co.uk, it appears that competition in the mortgage market has resurfaced in the past few weeks. The money comparison website pointed out that some firm deals are now only 0.99 percent as product quantities increase.
In the meantime, borrowers who have automatically forfeited a Standard Variable Rate (SVR) mortgage could save thousands of pounds by switching to a fixed deal.
Rachel Springall, a financial expert at Moneyfacts.co.uk, highlighted this this week.
“Typically, consumers should review their finances about every six months, but given the impact of the pandemic, it’s more important than ever to keep a closer eye on someone’s business, or even think twice.” she said.
“As we pull out of the early months of 2021, now is an ideal time to check out the latest mortgage and savings offers as consumers may find they are better off switching.”
Ms. Springall continued, “The motivation to move from a standard variable rate (SVR) mortgage to a fixed rate mortgage may be obvious, but what has become more apparent over the past few months is the reassurance that a longer term fixation can provide.
“Despite an increase in the average two-, five-, and ten-year fixed-rate mortgage in recent months, it’s still worth thinking about a new fixed-rate loan.
“Interest rate volatility is a response to the pandemic as the mortgage market contracted as lenders focused on their existing customers rather than new business.
“However, the situation seems to be turning for the better in the last few weeks as both price competition and product volume are returning.”
Summarizing the numbers, the financial expert stated that tens of thousands of pounds could be saved.
“Borrowers sitting on an SVR and switching to a five-year fixed-rate mortgage could save on average over £ 10,000 in the first five years of their mortgage life or have little disposable income to pay the associated fees,” she said .
These calculations are based on an outstanding mortgage balance of £ 200,000 over 25 years and an average 5 year fixed rate of 2.81 percent compared to an average SVR of 4.41 percent.
The savings are made after the first five years of the mortgage term.
“The best deal will also depend on the overall package. While some two-year fixed-rate mortgages come as low as 0.99 percent, they may not be the most attractive in terms of actual cost, and borrowers should be careful.” of headline grabbing rates.
“Mortgage borrowing remains robust, with the Bank of England highlighting its strongest numbers on record, and that momentum could continue as normalcy returns and lenders close new deals to attract new customers.”
According to Ms. Springall, it could be worthwhile to seek the expertise of a financial advisor.
“As more choice returns to the market and great deals come to the fore, it might be easier to navigate the mortgage maze as consumers seek independent financial advice and remove the potential stress of direct application and getting the process through to close.”
Regarding the savings market, Ms. Springall added: “The past few months have not been good for savings rates, but there is hope that the market will become somewhat more stable again as the cuts are less common.
“In fact, the challenger banks have brought some competition back into the fixed income market in the past few weeks, which is great news for savers looking for a decent return and keen to lock their money away.
“Of course there is an appetite for deposits, but not all savers will be willing to tie up their money, and should they consider an account with easy access, it is safe to say that the interest rates are not very attractive.
“The average price for easy-access accounts is at an all-time low, but savers can still choose these vehicles because of their flexibility, especially if they are financially hit by the pandemic and want their cash to go quickly.”