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Five year deals most cost effective
Lenders have taken the step to cut their fixed rate mortgages with brokers advising home owners to take advantage of five year fixed products that will see them through a longer period of predicted higher rates in the future.
Alliance & Leicester and Abbey have launched five year terms of 3.95% and the Woolwich have lowered their existing rate by 0.3% to a four year 3.99%.
Bank surpluses jumped more than a third to £19.6 billion in the last quarter of 2008, partly accumulated by refusing to pass on all or any of the rate cuts from the Bank of England.
The overall surplus that banks and other financial institutions have amassed, that is the difference between the interest charged and that paid out, was £6.2 billion. Rates on deposits have fallen quicker than the rates on loans enabling financial institutions to earn more.
According to figures from the Office for National Statistics, of the 92 lenders with a standard variable rate mortgage, only 22 have reduced their rates and passed the savings on to the borrower. The ones that have reduced their SVR and are passing on the full 0.5% is negligible.
The majority of brokers will now be advising their clients to consider fixing their mortgages as swap rates have now increased with some higher than before the quantitative easing.
As the value of property has taken a slide many homeowners will find that their loan to ratio has increased and therefore will not necessarily be eligible for the more competitive fixed rates on the market, many deals will only be available to home owners with less than 75% LTV.
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Your property may be repossessed if you do not keep up repayments on your mortgage.
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Grovelawn Limited is Registered in England & Wales number 5030300. Registered Address: 98 Station Road, Sidcup, Kent, DA15 7BY.
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