Co-op launches lowest-ever five-year fixed mortgage

IveSeenTheLight

Co-op launches lowest-ever five-year fixed mortgage

This doesn't seem to be any indication of rising rates any time soon.

Borrowers wanting to fix their mortgage for five years can now grab the lowest-ever rate, if they have a large deposit.
The Co-operative Bank launched a five-year fix at 2.79% with a £999 fee on Friday, but you need at least a 40% deposit, which is £80,000 on a typical £200,000 property.
The Co-op's move has prompted brokers to suggest homeowners consider fixing their rate given the ultra-low deals available.
Most borrowers on a standard variable rate (SVR) — which the majority of mortgages revert to after an introductory period — are paying more than the cheapest fixes.
The average SVR is 4.88%, according to data firm Moneyfacts, though some Cheltenham & Gloucester and Nationwide customers are paying just 2.5%.
Of course, if you switch mortgage, you will need to pay fees which can easily top £2,000, so factor those into calculations.
The Co-op's new deal is the latest in a long line of mortgage rate cuts, though like the Co-op, most of the top deals are only available to borrowers with a 40% downpayment.
Average rates down
Moneyfacts says the average five-year fixed rate is 4.29%, down from 4.6% in September, while a typical two-year fix is 4.31%, down from 4.57% two months ago.
David Hollingworth, from broker London & Country, points to a two-year fix from Santander at 1.99% with a £1,495 fee as one of the top deals at that length. That deal is only available with a 40% deposit, and only available via brokers.
Many of the rate cuts have been attributed to the Government's Funding for Lending scheme, which allows banks and building societies access to cheaper cash to lend out.
Hollingworth says: "The interest rates on fixed mortgage deals are now so low that the majority of borrowers will be tempted by the stability they offer.
"Last week the [Bank of England's] Monetary Policy Committee indicated there is little chance of a base rate cut, so more borrowers are understandably interested in protecting against future rises especially as fixed rates are at such competitive levels.
"Even those with low SVRs will find some fixed deals carry little additional price implication for locking into a rate, although the level of equity remains a key factor in the available rates."

ruggedtoast

Its the beginning of the next leg down.

somethingcorporate

Wish I was not in a fixed rate at the moment! that is a sweet deal.

michaels

Been discussing this on the mortgage board for.a.week. free valuation and legals for remortgage and flexible offset type facility up to 10 percent pa. Very tempted to dump my +2 percent offset tracker for this. No io unfortunately but can make term up to 75.

CLAPTON

shows conclusively that there is a huge mortgage famine caused by banks/BS refusing to lend

IveSeenTheLight

somethingcorporate wrote: »

Wish I was not in a fixed rate at the moment! that is a sweet deal.

You may find it worthwile to calculate your ERP costs and evaluate how long it takes to recoup the ERP costs with the lower rates.

From then on you save

IveSeenTheLight

ruggedtoast wrote: »

Its the beginning of the next leg down.

Of what? Mortgage rates?

Thrugelmir

IveSeenTheLight wrote: »

This doesn't seem to be any indication of rising rates any time soon.

Funding for Lending is only a short term measure to ease the lack of credit availability. Follow on rates will be higher as lenders will need to finance the funding for themselves.

Major impact is on savings rates not mortgage rates. As SVR's continue to edge upwards.

Conrad

CLAPTON wrote: »

shows conclusively that there is a huge mortgage famine caused by banks/BS refusing to lend

The FSA wont let them lend. Does anyone here actualy understand this or not?

CLAPTON

Conrad wrote: »

The FSA wont let them lend. Does anyone here actualy understand this or not?

Yes, I do understand that FSA puts a lot of regulations on lending that means many people don't meet these requirements... I know that because I've read many of your excellent posts and 'thanked' them appropriately.

However, for those that do meet the requirements (both for mortgages and commercial loans) and are willing to borrow, there is plenty of money available (which is why interest rates are so low).

The problem with the lack of housing demand is a combination of a lack of willingness to get into debt and a unrealistic lending requirements. Plus of course the extra taxes placed on new builds.

Conrad

CLAPTON wrote: »

Yes, I do understand that FSA puts a lot of regulations on lending that means many people don't meet these requirements... I know that because I've read many of your excellent posts and 'thanked' them appropriately.

However, for those that do meet the requirements (both for mortgages and commercial loans) and are willing to borrow, there is plenty of money available (which is why interest rates are so low).

The problem with the lack of housing demand is a combination of a lack of willingness to get into debt and a unrealistic lending requirements. Plus of course the extra taxes placed on new builds.

Clapton I meet lender reps begging me for business. I simply do not encounter this 'lenders don't want to lend thang'. Lender staff have sales and completion targets to meet.

When people say lenders don't wish to lend, how do they know this?

All I ever encounter is FSA rules in the way.
Example today - a very wealthy LL buying another B2L, but declined today as the lender got wind his Daughter might reside there, thus an FSA rule was breached. I'm talking someone with tens of millions in wealth here.
I promise you this sort of thing is my daily experience. Perfectly able people curtailed by the knowing nanny state.