Co-op Bank offer lowest ever fixed rate mortgage
Last Friday saw the lowest fixed rate mortgage ever offered in the UK go on sale. The deal offered a rate of 1.09% that is fixed for two years.
This new deal is the latest punch thrown in the mortgage price war that has been raging for some time. Back in April, HSBC started offering a fixed rate of 1.99% for five years - representing a landmark low for that length of an arrangement.
The director of mortgage broker Anderson Harris has said:
ìBorrowers have never had it so good,î
ìAdmittedly, borrowers need to get past the tighter restrictions introduced as a result of the mortgage market review, and require a sizeable deposit in order to access the best mortgage deals, but if they can do this, then the rates on offer are spectacularly low,î
This deal has led to even greater speculation that we may soon start seeing rates of below the hallowed 1% mark. With this deal dropping to such a low point, it is easy to believe that we may soon be seeing rates dip to that unprecedented level.
CEO of mortgage broker SPF Private Clients, stated:
ìWith the Co-op launching a two-year fix at 1.09%, unbelievable as it may seem, it could only be a matter of time before we have a sub-1% two-year fix.î
The deal being offered by the Co-op does require a 40% deposit and will therefore not be available to all buyers. The mortgage also comes with an arrangement fee of £1,499.
Mortgage rates only seem to be falling at the moment with more and more banks releasing their lowest mortgages ever. Nationwide has just started offering its lowest ever 5 year and 2 year deals. Coventry Building Society has just revealed its lowest ever five year mortgage. Barclays has also announced that it intends to match HSBC's rate of 1.99% on a five year deal.
These cuts in prices also span to those who want to take out a mortgage that offered fixed rates for ten years. Barclays have just cut the cost of their ten year deal down to just 2.99%.
There have been suggestions from people such as Mark Harris, CEO of SPF mortgage brokers, that the general election has caused a brief delay to the amount of mortgages taken out this year.
The Council of Mortgage Lenders has reported a slow start to this year, in terms of mortgage sales. The total for 2015 so far is £45bn - 12% lower than the end of 2014. However these low rates are seen as a bid from banks to reignite that market.
David Hollingworth at mortgage broker London & Country said:
ìIt just shows how hard lenders are pushing to catch borrowersí attention at the moment,î
ìThey are having to compete very hard to stand out from the crowd.î
Anderson Harris meanwhile, has urged people to not get "greedy" when it comes to waiting for rates to drop even lower:
ìHistorically, these rates are so low that you wouldnít regret fixing now.î
Whilst this is the lowest fixed rate deal ever to be offered in the UK, it is not the lowest rate overall that we have seen. A "tracker" mortgage offered by Cheltenham & Gloucester a few years ago, still holds that title. The mortgage fixed itself 1.01% below whatever the Bank of England had set interest rates to. This meant that when the Bank of England dropped interest rates over the last six years, mortgage holders with this deal paid no interest at all.
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