Here at MortgagesRM – Doncaster Fee Free Mortgage Advisor, we understand that mortgage rates and the market has changed dramatically since the financial crash a few years ago, which means lending in now more tightly regulated but that also means rates are lower than ever before.
The rates of mortgage lending were on everyone’s minds in South Yorkshire nearly ten years ago after the financial crisis triggered by the risky lending. This caused the entire country in the worst economic downturn since the Great Depression.
Nearly all Households up and down Doncaster and the Yorkshire region were plunged into negative equity, as property prices dropped, leaving thousands of homeowners unable to sell their property. However, it’s been all change in the mortgage market – strict new lending rules have been introduced, there’s been an explosion in the number of deals available, and rates have fallen dramatically.
The Mortgage Rates will stay as low as possible, which means the lenders will start to go back to the risky ways of the past. Stephen Kerrigan, MortgagesRM, reflected on the past decade and thinks about what’s next for Mortgages as we enter the 2020’s.
He mentions about how the rates have plummeted since 2009 and in recent years, and that the average two-year fixed rate deal stood before at 4.95% a decade ago. That is nearly half of the percentage today!
10 years ago, the average deal would see someone on a £100,000 mortgage taken over 20 year pay. Although, in today’s money, the average deal would cost someone on the same terms just $527 per month, even at £129 per month.
Fixed rates have been by far the favoured product in recent years and more borrowers have locked their rate down for the medium term, as the difference in cost between two- and five-year fixed rates has narrowed.
It’s not just those with big deposits that have benefited from this competition and first-time buyers in Doncaster, and those with small deposits have also had a much better choice of lender and deals.
Mortgage rates and savings are part of a complex web that draws in on official lending costs such as, base rates, money market funding, and competition deposits. The traditional influence on a fixed rate mortgage over the last decade. The cost of obtaining the fixed term funding relies on the money markets for the lenders.
Meanwhile, the traditional influence on the tracker rates over the same period has been libor, the cost of floating rate funding on the money markets. Savings and deposits back the mortgages as well as money in the market, while building societies are also limited in how much of the latter they can use.
The Swap rates will also push the mortgage cost and a fall will allow the lenders to cut them. Perhaps the biggest change of the past decade was the shakeup of mortgage lending rules five years ago.