Merry Christmas Everybody, we have some Good news… Banks are now offering festive rate cuts and cashback deals for First-Time Buyers and for people looking at Remortgages in Doncaster
With the festive season in full swing, you might be thinking more about Home Alone than Home Loans, but rate cuts and cashback incentives mean the January sales have come early for mortgage hunters. As they strive to hit end of year targets, some banks are offering cheaper mortgage deals. Not everyone’s feeling so generous, however, with a handful of lenders withdrawing deals as they wind down for the year.
Christmas is often an expensive time of year – but you could have more cash to spend on presents in December 2019 if you Remortgage to a cheaper deal now. The biggest rate cuts this month are on offer at lower loan-to-value levels, meaning they’re ideal for homeowners who’ve built up a bit more equity and are looking to Remortgage away from their lender’s standard variable rate.
For example, Halifax has chopped 0.35% off its five-year fixed-rate mortgages – meaning borrowers with a 40% deposit can get an interest rate of just 1.94% (with a £995 fee). Barclays has launched a similar deal at the same LTV level. That’s Good news For First-Time Buyers, as it was announced recently that more banks across South Yorkshire has cut the cost of its two and five-year fixes at 90% and 95% LTV by 0.3%.
But while these lenders are putting the ho-ho-ho in home ownership this Christmas, others haven’t been so generous, with several banks pulling their deals from the market as time runs out to complete before the end of the year.
If you’re looking for a Mortgage around this time of the year, you’re in luck! There is still 5 weeks to go before Christmas Day, and it’s possible that we could see further price cuts. However, Mortgage rates usually drop towards the end of the year, through that trend reversed in 2018 as prices had risen from the historically low rates.
Between October and December this year, the average rate on a two-year fix had fallen very slightly, while five-year fixes remained the same price. This just shows you how average rates have changed between October and December in each of the last five years.
So why aren’t mortgage rates falling by a bigger amount, as they did from 2014-2016? Quite simply, with two increases in the Bank of England base rate in the last 13 months, lenders are finding their margins more tightly squeezed. Because of this, they’re showing their Christmas cheer by offering more cashback deals instead.
MortgagesRM – Doncaster Fee Free Mortgage Advisor had a report that showed that 29% of Home Mortgages now offer some form of cashback, with 200 more cashback incentives available now than in December 2018.
Stephen Kerrigan, Mortgage Advisor in Doncaster: ‘Lenders will be focused on meeting their annual lending targets, but at the same time, it will be increasingly difficult to improve their range by rate alone due to the squeeze on their margins. Therefore, providers have revisited their incentive packages as a way to entice prospective borrowers, such as by offering cashback or creating a bundle of cost-saving incentives upfront.’
Whether or not you should Remortgage depends on the particulars of your current deal, with two primary factors to consider: When will you be moved on to your lender’s SVR? If you have a fixed-rate mortgage, you’ll be moved on to your bank’s SVR at the end of your introductory term (usually two or five years). Research by Mortgages Remortgages claims that the average SVR is now at its highest level since 2010 – which should come as no surprise given the recent increases to the base rate.
In fact, research conducted by Stephen Kerrigan, a Mortgage Broker from Doncaster earlier this year found that homeowners who fail to Remortgage before the end of their fixed term could end up paying £4,000 more per year than they need to. If you’re thinking of Remortgaging, there’s usually no reason to wait. Most banks will allow you to agree a new deal up to six months before the end of your current one.
Did you know that Remortgaging isn’t right for everyone, especially if those who are tied into longer fixed-term deals? Well this is because many mortgages come with early repayment charges, which can amount to around 5% of the remaining amount on your loan – potentially adding many thousands of pounds to the cost of it. If you’re subject to ERCs, you’ll probably need to wait until the end of your fixed term to get a better deal.