Hold out for lowest home loans ever! Best mortgage deals tipped to become even cheaper after Brexit rate cut
- Interest rates forecast to be cut to 0.25% by Bank of England after Brexit
- Mortgage brokers suggest waiting a few weeks could pay off
- Two-year fixes are cheapest but five-year fixed rate deals give security
Homeowners are in line for a Brexit boost as banks prepare to cut their mortgage rates.
The best deals are set to become even cheaper because Britain voted to leave the EU.
Cuts are likely because the Bank of England is being tipped to slash base rate from its record low 0.5 per cent to 0.25 per cent by the end of the year.
Experts say mortgage lenders will take the axe to home loan rates early to lure customers.
Borrowers now have some tricky decisions to make: should they wait to grab one of these new, cheaper deals?
And should they lock into a long-term or short-term contract?
Most mortgage brokers suggest waiting a few weeks to see if top new deals are launched.
Ray Boulger, of broker John Charcol, says: ‘I am convinced rates are going to come down, so my advice would be for borrowers looking for a fixed-rate mortgage to hold off until lenders act.’
Then it comes down to what type of loan you want to get.
The two main choices are a fixed deal or a tracker.
A fixed rate ensures your payments won’t change for a set period, while a tracker sees your bills move up or down with official base rate.
Fixed deals could get cheaper sooner than trackers. As soon as Brexit was confirmed last week, the cost to banks of funding fixed deals started to fall.
This is measured by so-called swap rates. When traders think the Bank of England base rate will fall, so do swaps — and vice-versa.
City experts think that the Bank of England will have to slash interest rates to keep the economy ticking over as Britain adapts to being outside the EU.
So in the wake of last Thursday’s referendum, swap rates fell by as much as one-third. These falls should soon be passed on to borrowers in the form of lower interest rates.
Taking a fixed deal now will give you peace of mind over your monthly housing bills, whatever happens over the next few years.