As the average UK house price rises to an all time high, we can now reveal that mortgages rates are becoming increasingly competitive, hitting unfamiliar lows and making now the best time in a long time to buy a new home.
Low mortgage rates are very good news for buyers, and might even help them navigate an unexpectedly expensive mid-pandemic housing market in the race to buy before the end of the stamp duty holiday.
Research shows that the lowest moving home mortgage rate (as opposed to a remortgage) is currently being offered by Clydesdale Bank, which offers 1.19% fixed rate until 31 January 2023 when it reverts to 4.55% variable.
As for three-year fixed mortgage rates, Barclays is currently offering the lowest at 1.49% fixed until Jan 2024 when it reverts to 3.59% variable.
Finally, for five-year fixed mortgage rates, Virgin Money is your best option right now. They’re offering 1.39% fixed until 1 March 2026 when it reverts to 4.34% variable.
We cannot overstate how generous these rates are. The banks are getting close to begging you to choose them over their competitors.
Approval rates also rising
While mortgage rates are hitting significant lows, additional data from the Bank of England shows that mortgage approvals have today hit a peak not seen since 2007. So, not only are mortgages more affordable, they’re also being handed out more freely.
Through the month of November 2020, the Bank of England was expecting slightly less than 85,000 mortgages to be approved, but we can now reveal that the actual number of approvals was over 97,500.
This marks a 33% increase in approvals compared to February 2020 and around 10-times higher than May, which was the year’s low point for approval rates.
What does this mean for buyers?
These figures are largely a result of increased buyer demand. With more people wanting to buy new homes, lenders are able to offer relatively generous rates, and approvals are rising for the same reason – more applications are being submitted.
Essentially, it’s in everyone’s interests to make borrowing cheap and readily accessible right now. The government needs the housing market to stay busy in order to prop up a wonky economy, buyers are desperate to take advantage of the stamp duty holiday, and mortgage lenders are doing all they can to ensure that they, too, can benefit from the increased demand for their lending services.
Our in-house property expert, Russell Wilson, says that this news makes now the best time in recent memory to be buying a house.
“With mortgage rates this low,” he says, “recent house price rises have, in effect, been mitigated. Borrowing money for home purchases has never been so cheap – in fact, the banks are almost paying you to take their money.
“When this is combined with the stamp duty holiday ‘freebie’ until March 31st, the question has to be: Can you afford not to buy a property right now?”
We can expect these mortgages trends to continue in the same direction through to Spring 2021 which is when the stamp duty holiday is currently scheduled to end. The picture beyond this point, however, is unpredictable. We’ve got Brexit on the horizon and an apparently inevitable post-Xmas pandemic surge to manage, so when the incentive to buy is taken away, we don’t know what will happen to the currently thriving housing market.
All of this means that this window of mortgage accessibility and generosity might not be open for long.