One of the reasons for this is an historic low interest rate and as such, mortgage lenders have been forced into offering extremely competitive deals to retain their existing borrowers and attract new ones.
Zoe Jackson
Operations Director, Equiniti Gateway
However, there are some borrowers who are staying with standard variable rates because they believe they won’t be able to afford a mortgage if they change lenders. There is still a lack of awareness among some customers about the wide array of products currently available on the market, and the level of interest they could save annually by changing lenders.
Zoe Jackson, Operations Director, at Equiniti Gateway said “We regularly speak to customers who aren’t aware of what lenders can offer them and how competitive rates have become. They are often sat on Standard Variable Rates over 5% per annum and incorrectly believe they won’t meet a lender’s criteria for a more competitive product. If a borrower knows they are going to be in the same property for the next 5 years or more, getting a fixed rate can be a perfect solution to assist their household budget over a longer term.”
With so much uncertainty in the economy, and every industry because of Brexit, a 5 year fixed rate mortgage gives borrowers a clear idea of their outgoings for the next few years.
“With interest rates so low, a 5 year fixed rate deal is likely to save people a considerable amount of money, or enable them to attain the amount they need due to the different affordability stress levels,” continued Zoe. “Previously borrowers were taking out a 2 year fixed or Tracker deals as interest rates were so changeable. There are so many products available on the market, now is the right time to focus on securing a more competitive rate for a longer term deal.”